Question

Write a project on Production and Costs. The paper should be structured as follows: a. Describe three key inputs (or factors of production) and fixed snd variable costs involved in the production of a product or service. b. Analyze the factors that impact the choice of inputs to profuce a chosen product or service. c. Examine the production decisions that you would make based on the analysis of the factors impacting the choice of inputs to produce a chosen product or service.

Answer 1

Answer on production and cost :

a)Factors of production are the inputs used to produce an output.

three key inputs are :

land , labor and capital.

Land : It is a natural resources uses to produce goods and services to generate profit.It includes natural resources such as coal,crude oil,metals etc.

labor : it s another important factor of production , their contribution is important in any production function.

Capital: every business is impossible to run, capital means finance, thus it helps the organisation to run smoothly.

In Economics production cost involve no. of costs that includes fixed and variable cost.

Fixed costs are the cost which do not change when output changes.example includes insurance,rent ,depreciation, set up cost.

variable cost is the cost that do vary with output they are also known as direct cost. Example includes raw material,some labor cost.

b) Factors that impact choice of input to produce are :

Cost : how much cost will be involved in the production or how capital is required , for purchasing of land and equipments, hiring labor,training the labors.

financial success can only be seen in long term , when return on investment comes.

environmental influence : for example the climate, soil,water which effects the productivity .

size of the firm

state of technology : is the technology is updated to produce maximum at a minimum cost.

Nature of the organisation.

c) lets break down production decision into following:

• production technology
• cost constraints
• input choices