{"id":5406,"date":"2019-02-14T09:48:18","date_gmt":"2019-02-14T04:18:18","guid":{"rendered":"http:\/\/astan.lk\/al_virtualclassroom\/?p=5406"},"modified":"2019-02-16T10:13:24","modified_gmt":"2019-02-16T04:43:24","slug":"production-process","status":"publish","type":"post","link":"https:\/\/astan.lk\/al_virtualclassroom\/production-process\/","title":{"rendered":"Production Process"},"content":{"rendered":"<ul>\n<li>Firm is a unit that produces products using economic resources<\/li>\n<li>Technological relationship between inputs and outputs is described by the production function<\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\">Production function is summarized by the following equation<\/span><\/h3>\n<p>Q = F ( L, K)<br \/>\nQ = output<br \/>\nF = Function<br \/>\nL = Labour ( Variable factor inputs)<br \/>\nK = Capital (Fixed factor inputs)<\/p>\n<ul>\n<li>Variable factor inputs and fixed factor inputs exist in the short run production<\/li>\n<li>All factor inputs are variable in the long run.<\/li>\n<li>Short run and long run are determined by the nature of production<\/li>\n<li>Short run production behaviour is characterized by the law of diminishing marginal returns<\/li>\n<li>Short run production is governed by the law of diminishing marginal returns<\/li>\n<li>Diminishing marginal returns states that when production is increased by increasing variable<br \/>\nfactor input for a given amount of fixed factor input, the average and marginal product of<br \/>\nthe variable factor will diminish after a point<\/li>\n<\/ul>\n<p>The table below illustrates the law of diminishing marginal returns<\/p>\n<p><a class=\"fancybox\" href=\"http:\/\/astan.lk\/al_virtualclassroom\/wp-content\/uploads\/2017\/01\/Untitled-tr.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-6627\" src=\"http:\/\/astan.lk\/al_virtualclassroom\/wp-content\/uploads\/2017\/01\/Untitled-tr-150x150.jpg\" alt=\"Untitled-tr\" width=\"534\" height=\"534\" \/><\/a><\/p>\n<ul>\n<li>Marginal product is zero when the total product is maximized<\/li>\n<li>Marginal product curve slopes downward through the maximum point of the<br \/>\naverage product curve<\/li>\n<li>Returns to scale explains long run production behaviour when all factors are<br \/>\nvariable<\/li>\n<\/ul>\n<h3>\nThere are three types of returns to scale<\/h3>\n<ul>\n<li>Increasing returns to scale<\/li>\n<li>Decreasing returns to scale<\/li>\n<li>Constant returns to scale<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li>Increasing returns to scale prevails when output is increased by a greater<br \/>\npercentage than the increase in all inputs in the long run production<\/li>\n<li>Decreasing returns to scale exists when output is increased by a less percentage<br \/>\nthan the increase in all inputs in the long run production<\/li>\n<li>Constant returns to scale exists when output is increased by the same percentage<br \/>\nto the increase in all inputs in the long run production<\/li>\n<li>Increasing returns are the result of economies of scale<\/li>\n<li>Increasing returns are caused by the geometric nature of certain inputs, indivisibility<br \/>\nof factors of production, use of machinery, division of labour and specialization<br \/>\nof labour, and one time payment<\/li>\n<li>Diseconomies of scale causes decreasing returns to scale<\/li>\n<li>Decreasing returns to scale are caused by depletion of resources, stress and,<br \/>\nproblems of management and coordination<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Firm is a unit that produces products using economic resources Technological relationship between inputs and outputs is described by the production function Production function is summarized by the following equation Q = F ( L, K) Q = output F = Function L = Labour ( Variable factor inputs) K = Capital (Fixed factor inputs) [&hellip;]<\/p>\n","protected":false},"author":842,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,2683],"tags":[],"class_list":["post-5406","post","type-post","status-publish","format-standard","hentry","category-economics","category-unit-3-en"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Production Process - Learning &amp; 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