Question

Calcucate the factor of production for car parking space using a table.

Question: Calcuate Fixed cost, Variable cost and total cost.

Answer 1

Answer- Factors of production are

1.land-Land has a broad definition as a factor of production and can take on various forms, from agricultural land to commercial real estate to the resources available from a particular piece of land.

2.labour-All human effort that assists in production is labour. This effort can be mental or physical. It is a human factor of production. It is the worker who applies their efforts, abilities, and skills to produce.

3.capital-Capital refers to all manmade resources used in the production process. It is a produced factor of production. It includes factories, machinery, tools, equipment, raw materials, wealth.

4.enterprise/Entrepreneurship-

An entrepreneur is a person who brings other factors of production in one place. He uses them for the production process. He is the person who decides:

• What to produce
• Where to produce
• How to produce

Factors of production	cost (Assumed)
Land (rent)	20,000
Labour (wages)	5,000
Capital	1,00,000
Enterprise/entrepreneurship	nil

Fixed cost- Soo fixed cost is the cost that is incurred on fixed assets and remains the same no matter what the output is.fixed assets can not be changed in a short run.For example-land,as it remains same no matter what the output.

Variable cost-Variable cost is the cost which is incurred on variable factors and varies with the level of output and can be changed in short run.For example-Raw material-as It varies with the level of output and can be changed in a short run.

Total cost- it is the total cost of production which includes fixed cost and variable cost

Total cost= Fixed cost+Variable cost

Here the Fixed cost will be for land that is rent =20,000

Here the variable cost will be for labour=5,000

And total cost will be = 20,000+5,000=25,000