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ID 082-076-041 082-080-041 082-093-041 082-100-041 082-109-041 082-111-041 082-118-041 082-125-041 082-131-041 S.M.Riadul Islam Md.Tanvir Ahmed

NAME

Md.Asif Iqbal Sohel Rana Mosharaf Hossain Anirban Saha Rafikul Islam Roni Mozumder Md.Al-Amin

Production Economics

Utility of goods

The needs fulfilling power of a product is called utility. It is a quality possessed by a product or service to satisfy human requirements. Utility is based on the following types. They are

Forms Utility

Place UtilityTime Utility Service Utility

Possession Utility

WealthWealth means money, property, gold etc. But in economics it is used to portray all things that have value. For a product to be called wealth, it must posses utility, scarcity and transferability. In the event of lacking even one quality it cannot be connected as wealth.

Forms of Wealth Individual Wealth Social Wealth National or Real Wealth International Wealth Financial Wealth

Price

Economists sometimes define price in a more general or abstract sense to the widely understood definition above. According to this view, price is defined as the ratio between the quantity of goods that are exchanged for each other in a transaction

Want

In economics, a want is something that is desired. It is said that every person has unlimited wants, but limited resources. Thus, people cannot have everything they want and must look for the most affordable alternatives.

Theory of utility of supply and demand. The Law of Demand The law of demand states that, if all other factors remain constant, the higher the price of a good, the less people will demand that good. In other words, the higher the price, the lower the quantity demanded.

The Law of SupplyLike the law of demand, the law of supply demonstrates the quantities that will be sold at a certain price. But unlike the law of demand, the supply relationship shows an upward slope. This means that the higher the price, the higher the quantity suppliedThe four basic laws of supply and demand are: If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.

If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity. If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.

Elasticity of supply and demand The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity. Elasticity varies among products because some products may be more essential to the consumer. Elasticity = (% change in quantity / % change in price)

factors of production

Following chart provides brief tabulated information on 4 factors of p

Division of labourDivision of labour is a process whereby the production process is broken down into a sequence of stages and workers are assigned to particular stages. ADVANTAGES OF SPECIALISATION / DIVISION OF LABOURTo the business:Specialist workers become quicker at producing goods - Production becomes cheaper per good because of this - Production levels are increased - Each worker can concentrate on what they are good at and build up their expertise

To the worker: - Higher pay for specialised work - Improved skills at that job.

DISADVANTAGES OF SPECIALISATION / DIVISION OF LABOURTo the business:- Greater cost of training workers -Quality may suffer if workers become bored by the lack of variety in their jobs

To the worker:

- Boredom as they do the same job - Their quality and skills may suffer - May eventually be replaced by machineryOTHER TYPES OF SPECIALISATIONREGIONAL INTERNATIONAL

Location of Industries'localization of industries' is meant the tendency on the part ofindustries to be concentrated in regions which are most suited for their development. Factors: The important factors which influence the localization of industries are discussed as below:(i) Nearness to raw material. (ii) Availability of source of power (iii) Physical and climate conditions. (iv) Nearness to market.

v) Supply of trained labor.(vi) Availability of capital (vii) Momentum of an early start.

Factors may be placed into three basic categories:

1. Natural Advantages 2. Acquired Advantages 3. Government Advantages

The factors can be listed as follows:

a) Cost-[Acquired] b) Closeness to a source of raw materials-[Natural] c) Closeness to a source of power-[Acquired and/or Natural] d) Closeness to a market-[Acquired] e) Closeness to an educated working force-[Acquired] f) Closeness to a method of transport-[Acquired] g) Government Intervention-[Government] h) In a suitable climate-[Natural] i) In a stable political atmosphere-[Government] j) Health facilities-[Acquired]

Problems of allocationCapital Allocation A process of how businesses divide their financial resources and other sources of capital to different processes, people and projects. Overall, it is management's goal to optimize capital allocation so that it generates as much wealth as possible for its shareholders.

Time.

Accuracy.Transparency Trust.

investment study capitalCapital investment Analysis that involve the purchase of items such as land, machinery, buildings, or equipment are among the most important decisions undertaken by the business manager.

Selecting investments that will improve the financial performance of the business involves two fundamental tasks:

Economic Profitability

Financial Feasibility

For some businesses the production function is relatively simple--a few processes with little substitution. For some businesses the production function involves thousands of different processes and millions of substitution possibilities. The production function is the economists summary of the input requirements for each level of production. The production function shows the input requirements for each level of production.

Specifying the production function A production function can be expressed in a functional form as the right side of Q = f(X1,X2,X3,...,Xn) where: Q = quantity of output X1,X2,X3,...,Xn = quantities of factor inputs (such as capital, labour, land or raw materials).

Production function as a graph

The Economics of small scale and large scale productionThe economies of large scale production are classified by Marshall into: (1) Internal Economies and (2) External Economies. 1) Internal Economies : (i) Technical Economies (ii) (ii) Managerial Economies (iii) (iii) Marketing Economies (iv) (iv) Financial Economies (vi) Economies of Scale (2) External Economies :

(i) Economies of localization. (ii) (ii) Economies of vertical disintegration. (iii) Economies of information (iv) Economies of by products

Survival of Small Scale Firms:

Small scale production firms has the actual survival value side by side withlarge scale production. The facts are that small scale firms have a firm footing along with the large scale firms. The reasons are that small scale firms concerns enjoy certain advantages which are peculiar to their own. They are following: Reasons for Survival of Small Scale Firms: (i) Close supervision. (ii) Economic independence. (iii) Economy in management (iv) Close contact with customers. (v) Greater adaptability to Changes.

1.http://economicsconcepts.com/optimum_factor_combination.htm

2.

http://www.tutorsonnet.com/homework_help/micro_economics/basic_concepts_ of_economics/some_basics_concepts_stocks_and_flows_tutoring.htm3. : http://www.investopedia.com/articles/basics/07/capitalallocation.asp#ixzz1Uh0N2fWj