presentation prepared by 2011 humanities batch under the leadership of mathew j. vettickal under the super vision of sudheesh plathottam

1. CHAPTER =3 PRODUCTION, COSTS AND REVENUE

2. PRODUCTION Production refers to the creation of material things. In economics the word production is used in a broader sense to include the creation of material commodities as well as non-material services. But only productive activities which create value are included in production Production is the creation of value

3. TotalProduct Total product refers to total output at a particular level of employment of a variable input, keeping all other inputs constant

4. Average Product Average product is the output produced per unit of a variable input. This can be found out by dividing total out put by the number of units of the variable factor employed. AP=TP/X X=number of variable input

5. Marginal Product Marginal product is the addition made to total product through the employment of an additional unit of a variable input, keeping all other inputs constant. MP= q / x Q is change in output X is change in input

7. Constant Returns to Scale

9. Diminishing Returns to Scale Diminishing returns to scale is the situation in which proportionate Increase in inputs causes a less than proportionate increase in output

10. COST Cost refer to the expenses incurred in production cost is an important concept in production

11. Fixed cost Fixed costs are those costs which remain fixed. Fixed costs do not change with output Variable cost Variable costs are those costs that vary with output. They vary directly with output

13. Private cost and social cost

14. Explicit and implicit cost

15. Opportunity cost

16. Total fixed cost ,Total variable cost , Total cost

17. Average Variable cost =TVC/output Average Fixed cost =TFC/output Average cost=TC/output

18. Marginal cost Marginal cost is the additional cost . It is the addition made to total cost by Producing an additional unit of the commodity

19. REVENUE Revenue refers to the sale proceeds of the firm . It is the receipts from sale

20. Total Revenue Total revenue is the total sales proceeds of the firm TR=P*Q P=Price Q=Quantity sold

21. Average Revenue Average revenue is the revenue per unit of output sold Marginal Revenue Additional revenue obtained from the sale of an additional Unit of the commodity

22. Break Even Chart