3.3.pptx-FIXED AND VARIABLE FACTORS IN PRODUCTION
- 1. BUSINESS ECONOMICS 107 UNIT- 3 Faculty Name: Dr. Shuchi Singhal Designation: Associate Professor School/Dept: Management Email address of Faculty Member: s.singhal@dme.ac.in
- 2. Programme Outcomes 2 PO1: Apply knowledge of various functional areas of business PO2: Develop communication and professional presentation skills PO3: Demonstrate critical thinking and Analytical skills for business decision making PO4: Illustrate leadership abilities to make effective and productive teams PO5: Explore the implications and understanding of the process of starting a new venture PO6: Imbibe responsible citizenship towards a sustainable society and ecological environment PO7: Appreciate inclusivity towards diverse cultures and imbibe universal values PO8: Foster Creative thinking to find innovative solutions for various business situations
- 3. Course Objective and Course Outcomes 3 CO1:Understand the fundamental concepts of Business Economics. CO2:Analyze the relationship between consumer behaviour and demand. CO3:Explore the theory of production through the use of ISO-QUANTS. CO4:Understand the concept and relevance of short- term and long-term cost. CO5:Examine pricing decisions under various market conditions. CO6:Analyse economic challenges posed to
- 4. Syllabus
- 5. Unit-III : (Theory of Production) 5 3.1 MEANING AND CONCEPT OF PRODUCTION 3.2FACTORS OF PRODUCTION AND PRODUCTION FUNCTION 3.3 FIXED AND VARIABLE FACTORS 3.4LAW OF VARIABLE PROPORTION (SHORT RUN PRODUCTION ANALYSIS)-Part 1 3.5 LAW OF VARIABLE PROPORTION (SHORT RUN PRODUCTION ANALYSIS)-Part 2 3.6 LAW OF VARIABLE PROPORTION (SHORT RUN PRODUCTION ANALYSIS)-Part 3 3.7 LAW OF VARIABLE PROPORTION (SHORT RUN PRODUCTION ANALYSIS)-Part 4 3.8 LAW OF RETURNS TO A SCALE(LONG RUN PRODUCTION ANALYSIS) THROUGH THE USE OF ISOQUANTS- Part 2 3.9 LAW OF RETURNS TO A SCALE(LONG RUN PRODUCTION ANALYSIS) THROUGH THE USE OF ISOQUANTS-Part 3 3.10 LAW OF RETURNS TO A SCALE(LONG RUN PRODUCTION ANALYSIS) THROUGH THE USE OF ISOQUANTS- Part 4 3.11 LAW OF RETURNS TO A SCALE(LONG RUN PRODUCTION ANALYSIS) THROUGH THE USE OF ISOQUANTS- Part 5
- 6. 3.3 • Fixed and Variable Factors 6
- 7. By: Shuchi Goel 7 3.3 FIXED AND VARIABLE FACTORS
- 8. By: Shuchi Goel 8 Suggested Readings 1. Author: Christopher R. Thomas & S. Charles Maurice Title of the Book: Managerial Economics-Foundations of Business Analysis and Strategy Chapter’s Name: Production and Cost in the Short Run 2. Author: Paul A. Samuelson and William D Nordhaus Title of the Book: Economics Chapter’s Name: Production and Business Organisation https://courses.lumenlearning.com/wmopen-microeconomics/chapter/the-production- function /
- 9. 9 3.3 FIXED AND VARIABLE FACTORS • A variable factor of production is one which can be readily varied in order to change the level of output. • Labour services to run production facilities are an example of variable factor. • Producing more output is accomplished by using greater amounts of the variable factor, and output is reduced by using smaller amounts of the variable factor. • In contrast to variable factor, the usage of some factors cannot be readily varied. This type of factor is called the fixed factor of production. The reason of inability to vary the fixed factor lies in the prohibitively high cost of adjusting the level of factor usage. As a result, the manager will treat the level of usage of that factor as fixed at its current level. By: Shuchi Goel
- 10. By: Shuchi Goel 10 • No matter how much output the firm produces-even when the output is zero-the firm uses a constant amount of the factor and must pay for the factor even if the firm ceases production. For example, the number and size of buildings used by a business cannot be quickly varied, so the amount of building space would be treated as a fixed input.
- 11. By: Shuchi Goel 11 Conclusion • A variable factor of production is one which can be readily varied in order to change the level of output. • In contrast to variable factor, the usage of some factors cannot be readily varied.