PRODUCTION AND COST

During 29thFeb, Sir Amir have teach us a new topic, which is Production and Cost. On the first day of learning this topic, he give us a really interesting and objectives that we need to know when we study this topic. During that day, we studied the definition of production, short run and long run production and also, the types of production. 


Definition of Production

• Process of using the factors of production process or services
• Transformation of inputs into outputs

Short-run and Long-run Production

SHORT RUN

At least one of the inputs is fixed but the other input are varied

LONG RUN

All inputs are variable

FIXED INPUT

Quantity does not change according to output ( e.g machiner, land, building )

VARIABLE INPUT

Quantity change according to output (e.g raw materials, transportation)

Types of production

PRIMARY PRODUCTION

• ·         First stage on the production process
• ·         Use raw materials

SECONDARY PRODUCTION

• ·         Second stage on the production process
• ·         Involved manufacturing the finished goods from raw materials
• ·         Produced finished product

TERTIARY PRODUCTION

• ·         Third stage in production process
• ·         Not produce goods, but provides goods
• ·         Involves services

-Services divides into two which is commercial and direct services