Managerial Economics And

Enviroment
Name :- GAURAV SINGH
Enrollment :- WRN202300039161
Class :- MBA | A
Course :- Managerial Economic & Enviroment
Course Code :- F010704
Name of Faculty :- Dr. Prasant Trivedi Sir
Department :- Department of Business Management School
School :-School of Business Management
University :-CSJMU
 Production of Function

 Any activity which creats valueis produton.

 In other word, production is transformation of input ( such
as capital, equipement etc )
 Eg.- transporting sand, operating a jweller store, drilling for
oil, rcuiting new empoyees.
 Theory Of Cost
• The modern theory of cost in Economics also specifies economies of
scale where an increased production decreases the cost per unit of
production.
• . The returns to scale first increase, then stabilize for some time and
then decrease.
 Law of Variable Proportion
 This Law place a vital role in economic theory.
 It examines the production unction with one factor variable.
 Keeping the quntities of other factors fixed.
 In other words, its refers to the input-output relation when output
is increased by varying the quantity of one input.
 Law of Returns to scale
 The term returns to scale refers to the changes in output as all factors
change by the same proportion ,” koutsoyiannis
 Returns to scale relates to the behaviour of total output as all inputs
are varied and is a long run concept.”
 Economic of Scope
 Exist if the firm achieves cost saving as it
increase the variety of goods or service
produced.
 Economic of scope defined in terms of the
relative total cost o producing a variety of
goods and service together in one firm
versus separately in two or more firms.
 Exist if the firms achieves saving as it adds
the production of a good or service.
 Optimal Combination of Inputs
• The optimal input combinationis that input combination
which maximizes output given the costs faced by the firm.
• Theoptimal input combinationis that input combination which
maximizes output given the costs faced by the firm.  To find
the combination, we find the point where thefirm’sisoquant is
tangent to theisocostcurve
 Isocost Curve
• The isocost curve shows all input combinations (of K and L) that cost
the firm the same amount.
• For a firm using K and L, the isocost curve/line is presented as:?𝐶
= ?? + ??
• Where: TC= total cost w=price of labour (wage rate) r= price of
capital (interest rate) L= amount of labour employed K= amount of
capital employed
Thank You