ECO 1013: CLASS REFLECTION WEEK 8

Assalamualaikum guyss 

In week 8, kita dh masuk chapter baruu 

So lets get started 

C H A P T E R 3 : COST OF PRODUCTION

PRODUCTION

1. Definition of production process of using factors of production to produce goods or service.

2. Short run production  time frame where if has at least 1 fixed input and others are variable.

3. Long run production time frame where all inputs are variable

4. Types of production

Primary production 1st stage in production process. Involves raw materials to produce intermediate goods. Example: coal mining.

Secondary production  2nd stage production process. Involves manufacturing process. Use raw material from primary production to produce finished goods. Example: automobile

Tertiary production  3rd stage in production process. Does not provide goods but provide services. Services can be divided into 2 :

Direct services  there is no intermediate person. 

Commercial services  does not create the product but sell the product (services)

5. Law of Diminishing Marginal Returns  if a certain factor quantity , one of the factors kept the same 

6. Total product (TP) amount of finished goods produced when a given amount of factor of production used together with the fixed inputs

7. Average product (AP)  can be obtained by dividing total finished product by the total amount of factors of production used. 

8. Marginal product (MP)  change in total of finished product based on additional change in factor of production. 

Thanks for reading ! 

 P/S : Extra video on Diminishing Marginal Return