PRODUCTION FUNCTION (THEORY)

Production Creation Utility Addition of Value

of

Production Creation of Utility Form Utility

utility JAM L

Place

Time All

Utility

Personal Utility

LAND

All Free Nature

gift of

PerfectlyInelastic Economy

Fixed in Quantity Relatively Elastic Indio

Permanent

Lack's Mobility

specificfactor of production

Varies in fertility

LABOUR

Mental

or Physical Exertion EconomicReward

Human Efforts

Perishable Nature

Weak Bargaining Power

self source

Variations

Productivity

Relation Between Labour Supply Wage Rate



le Between Labour up ly k g l he

Direct Relation

Reverse Relationship at Higher Prices

Reverse Relationship at Lower Prices

CAPITAL

Part of wealth used for further production of

wealth or which yield's an income

Stock Concept

Produced Mean's Manmade mean's of production

Mobility

Perishable

Types of Capital

v v v v

Fixed Real Tangible Individual

v v v v

Circulating Human Intangible Social

CAPITAL FORMATION

Increase in stock real capital Capital Goods

of

Replacement Renovation Additional Productive Capacity

Creation of Mobilisation of Investment

ofsaving's

SavingsEhud Savings into Real Capital

Voluntary

f Compulsory
1 I

Individual
1
Household

1 Banks 1 Entrepreneur's

2 Business

2 Financial Institution 2 Positive Eco Env

Government 3 Capital Market 3 Inducement to Trust

ENTREPRENEUR

Organiser Manager Risk Taker

Catalyst

Final Responsibility

Initiate Risk Bearing Innovations

ENTERPRISE's OBJECTIVES

v v

ORGANIC SOCIAL NATIONAL

Survival

Growth Expansion

ECONOMIC HUMAN

Profit

ENTERPRISE's PROBLEMS

v v v

Objectives

Physical Organisation Legal

Facilities v structure Compliance

Location Finance Marketing Industrial

Size of Relation

Plant

CONSTRAINTS IN ACHIEVING OBJECTIVES

v v

Information Factor's
of others

Production

Infrastructure Economic

Aspects