Production & Cost (Chapter 3)

        PRODUCTION AND COST

Definition of production process of using the factors of production to produce goods or services Transformation of input into output (physical goods)

TIME PERIOD OF PRODUCTION

SHORT-TERM PERIOD At least one fixed input Eg: building, equipment , tools

LONG-TERM PERIOD All input are variable Variable input which the quantity changes according to output Eg: raw materials, transportation, communication

                                          TYPES OF PRODUCTION

PRIMARY First stage on production process eg: agricultural, fishing

SECONDARY Manufacturing the finished goods from raw materials. Eg: motorcar industries, consumer goods

TERTIARY Do not produce goods but provide services. Divided by two. Commercial services (physical goods) Direct services (teacher, police)