Tag: Production Economic Resources and Resource Allocation

Production

Production Production is defined as the means by which resources (whether tangible, such as, raw materials or intangible, such as, ideas/information) are transformed into goods (tangible) and services (intangible). Productivity however, is the measure of the efficiency of the production process, and is calculated as the ratio of what is produced to what is required…...

Factors of Production

Factors of Production Factors of production are the inputs/resources required for the production of goods and services, namely, land, labour, capital and entrepreneurial talent. What are the rewards of each? The land yields rent, the labour force is paid wages or salaries for their services, capital invested earns interest and the entrepreneurial talent warrants profit.…...

Costs

Costs All firms, whether they produce goods or services, are subjected to operational costs. Variable costs, are those which increase and decrease with the productivity of a firm. Fixed costs are costs which exist regardless of the level of production of the firm. Fixed costs do not fluctuate with productivity. Total cost is the sum…...

Short Run and Long Run

Short Run and Long Run The phrases, short run and long run are used frequently in economics. The major difference between the economic short run and long run is, the flexibility afforded to decision makers. The short run refers to the time period for which the commitments that a firm has made are binding. The…...

Economic Systems

Economic Systems It is imperative in economics, that issues be contextualized before attempting to address them in any way. Identifying the type of economic system that exists in a region should be one of the first strides in contextualizing. There are four types of economic systems: Traditional, Command/Planned, Free/Capitalist and Mixed Economies. The major differences…...

Economies of Scale

Economies of Scale Economies of scale (increasing returns to scale) occurs when the inputs into the production of a certain good increases by an amount/percentage, X, and the quantity of output rises by more than X percent. Examples of economies of scale are Technical, Marketing, Financial and Risk-Bearing economies. A diseconomy of scale refers to…...