Notebook 21 Economics 5 2 Theory of Production

Notebook # 21 Economics 5 -2 Theory of Production

Economics 5 -2 Theory of Production ESSENTIAL QUESTION: • Has the quality of your work ever declined because you worked too hard at something? • Sometimes you reach a stage where you still make progress but at a diminished rate.

Economics 5 -2 Theory of Production GPS STANDARDS: SSEMI 2 a. ) define the law of supply and demand

Economics 5 -2 Theory of Production – Whether they are film producers of multimillion dollar films like Titanic, The Dark Knight, OR Avatar – small companies that market a single product – suppliers face a difficult task……

Economics 5 -2 Theory of Production – Producing an economic good or service requires a precise combination of land, labor, capital, and entrepreneurs.

Economics 5 -2 Theory of Production • The theory of production deals with the relationship between these factors of production and the output of goods and services. • The output of goods and services produces the supply

Economics 5 -2 Theory of Production • The theory of production generally is based on the short run, a period of production that allows producers to change only the amount of the variable input called labor.

Economics 5 -2 Theory of Production • This contrasts with the long run, a period of production long enough for producers to adjust the quantities of all their resources, including capital.

Economics 5 -2 Theory of Production • For example, Ford Motors hiring 300 extra workers for one of its plants is a short-run adjustment. • If Ford builds a new factory, this is a long-run adjustment.

Economics 5 -2