Question

Production economic principles and the theory of the firm form the basis for analysing decisions by businesses about what goods and services to produce, how many goods and services to produce, and how to produce goods and services. Drawing on your understanding of the concepts of production functions, total, average, marginal, fixed and variable costs of production, and output and revenue, and using labelled diagrams, explain the key principles and measures a manager of a business would use to decide how much of a variable input to use in a production process and how much total product to make in a production cycle.

Answer 1

The variable inputs in a process of production are can be decided by the firm it self

1) land (natural resource can be on rented) can be fixed also

2) labour will be 100% variable

3) capital also variable input in the business

the process of production includes following product to make in a production cycle

1) first step is the forecasting of the sales area or knowing the target market (market research)

2) budget should be arranged and monitered accordingly

3) how much have to produce means the the planning for the quantity should be produced required

4) dispatching is the important step that how would the product reached to the market which was targeted in the planning portion

5) location or progression the location where the production should be performed

6) inspection and evaluation the quality check and the product evaluation and customer satisfying monitoring part will be evaluated