SNS College of Technology

Coimbatore - 35

19BAT603 - MANAGERIAL ECONOMICS

Unit III- PRODUCTION ANALYSIS

Topic: Guess?????

Department of Management Studies

Presented By,

Ms. VISHNUPRIYA V
 Recap

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 02/16

 Connect these
Pictures….

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 03/16

 What is Production?

 In economics, Production is a process of transforming

tangible and intangible inputs into goods or services.

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 04/16

 Production Definitions.

 It can be defined as an organised activity of transforming

physical inputs (resources) into outputs (finished
products), which will satisfy the products’ needs of the
society. - James Bates and J.R. Parkinson
 It  is an activity whether physical or mental, which is
directed to the satisfaction of other people’s wants
through exchange. - J.R. Hicks

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 05/16

 Importance of Production.

 Helps in creating value by applying labour on land and

capital
 Improves welfare as more commodities mean more utility
 Generates employment and income, which develops the
economy.
 Helps in understanding the relation between cost and
output

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 06/16

 What is Production Possibility Curve?

 It provides an overview of the maximum output of a

good that can be produced in an economy by using
available resources with respect to quantities of other
goods produced.
 It is also known as Production Possibility Frontier (PPF)
or transformation curve.

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 07/16

 Production Possibility Curve Example

A ( lak) B(thousands)
▪ 100 0
▪ 90 1
▪ 70 2
▪ 40 3
▪ 0 4

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 08/16

 Contd..
 The rate at which an amount of product is sacrificed for
producing the amount of another product is called
Marginal Rate of Transformation (MRT).

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 09/16

 Uses of Production Possibility Curve
 It enables the planning authority of a developed nation to
divert the usage of its resources for the production of
necessary goods to the production of luxury goods and from
consumer goods to producer’s goods, after a certain point of
time.
 It helps a democratic nation to focus and shift a major
amount of resources in the production of public sector
goods instead of private sector goods.
 The public sector goods are supplied and financed by
government, such as public utilities, free education and
medical facilities.

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 10/16

 Contd.

 On the other hand, private sector goods are

manufactured by privately owned organizations and are
purchased by individuals at a certain price.
 It helps in guiding the movement of resources from
producer goods to capital goods, such as machines,
which, in turn, increases the productive resources of a
country for achieving a high production level.

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 11/16

 Time for the
assessment…

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 12/16

 MCQ

1. Production Process curve also called as

2. What is marginal Rate Transformation?
3. The Public sector goods are___________

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 13/16

 Summary

 Definition of Production
 Important of Production Analysis
 Production Possibility Curve
 Uses of PPC

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 14/16

 Reference

 https://www.geektonight.com/production-possibility-cu
rve-2
/
 https://www.geektonight.com/managerial-economics-
notes/

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 15/16

 REACH US

snsinstitutions

snsinstitutions

snsinstitutions

snsinstitutions

snsinstitutions

20.01.2020 Ms.V.VishnuPriya AP / MBA – ME 16/16