truensa.blogg.se - Befa notes pdf

The underlying assumption of production is that maximisation of profit is the key objective of the producer.

9 Further references and external linksĮlements of Production Economics.

5.2 The dual approach for the formulation.

5.1 The procedure for formulating objective functions.

2.4 Absolute (total) and average income.

2.2 Main processes of a producing company.

1.3 Behaviour, consumption and productivity.

Because of this double role, market production is the “primus motor” of economic well-being and therefore here under review. the role of producing goods and services and the role of creating income. Thus market production has a double role in creating well-being, i.e. Public production and household production are financed by the incomes generated in market production. Market production is the only production form that creates and distributes incomes to stakeholders. Improving the competitiveness of products means often to the producer lower product prices and therefore losses in incomes which are to be compensated with the growth of sales volume.Įconomic well-being also increases due to the growth of incomes that are gained from the growing and more efficient market production.

Improving the quality-price-ratio of commodities is to a producer an essential way to improve the competitiveness of products but this kind of gains distributed to customers cannot be measured with production data. The need satisfaction increases when the quality-price-ratio of the commodities improves and more satisfaction is achieved at less cost. The satisfaction of needs originates from the use of the commodities which are produced. All of them produce commodities which have value and contribute to the well-being of individuals. In order to understand the origin of economic well-being, we must understand these three production processes. The most important forms of production are: They are improving quality-price-ratio of goods and services and increasing incomes from growing and more efficient market production or total production which help in increasing GDP. In production there are two features which explain increasing economic well-being. The degree to which the needs are satisfied is often accepted as a measure of economic well-being. Įconomic well-being is created in a production process, meaning all economic activities that aim directly or indirectly to satisfy human wants and needs. The production function assesses the relationship between the inputs and the quantity of output. It is common practice that several forms of controllable inputs are used to achieve the output of a product. In addition to the common factors of production, in different economic schools of thought, entrepreneurship and technology are sometimes considered evolved factors in production. However, there is a difference in human capital and labour.

Delving further, primary factors encompass all of the resourcing involved, such as land, which includes the natural resources above and below the soil. Under classical economics, materials and energy are categorised as secondary factors as they are byproducts of land, labour and capital. These primary inputs are not significantly altered in the output process, nor do they become a whole component in the product. Known as primary producer goods or services, land, labour, and capital are deemed the three fundamental production factors. The production process and output directly result from productively utilising the original inputs (or factors of production).