Production

Question 1

What is Production?

Answer 1

The process of converting inputs, including the services of factors of production such as capital and labour, into final output

Question 2

What are Inputs?

Answer 2

These are the resources or factors of production, land, labour, capital and enterprise, used in the production process

Question 3

What are Outputs?

Answer 3

The goods and services produced

Question 4

What is Productivity?

Answer 4

A measure of the efficiency with which inputs are transformed
into outputs

Question 5

What is Labour Productivity?

Answer 5

Output per worker or output per labour hour

Question 6

What is Total Product (TP)?

Answer 6

Total output of goods and services produced by a firm or a production process within a given period, using a specific amount of input

Question 7

What is Average Product (AP)?

Answer 7

Output per unit of input (AP = TP/L where labour {L} is the variable factor of production)

Question 8

What is Marginal Product (MP)?

Answer 8

The change in total product when one more unit of the variable factor is added (MP = change in TP/change in L, where L is the variable factor)

Question 9

What is the Law of Diminishing Returns?

Answer 9

As the use of one variable input
increases while others are held constant, the additional output gained will eventually diminish.