MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS

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Presentation transcript:

MANAGERIAL ECONOMICS & FINANCIAL ANALYSIS CHAPTER-2 Mr. K. NAGAIAH, (Ph.D)./ Ms. RUHI AFREEN/ Ms. S. RUBEENA ASSISTANT PROFESSOR DEPARTMENT OF MANAGEMENT STUDIES

THEORY OF PRODUCTION AND COST ANALYSIS UNIT-II THEORY OF PRODUCTION AND COST ANALYSIS

PRODUCTION Production is the conversion process of Input resources into Output.

PRODUCTION FUNCTION A producer has to combine different factors or inputs to produce the certain outputs Production function explains the physical relation between input used and output produced by the firm. This relationship when expressed in the form of an equation is as follows O=f (a, b, c, d)

ISOQUANTS

MARGINAL RATE OF TECHINAL SUBSTITUTION (MRTS)

Laws of Return to Scale Laws of increasing return to scale. Laws of decreasing return to scale. Laws of constant return to scale.

ECONOMIES OF SCALE Internal advantages External advantages

Internal advantages Managerial economies Commercial economies Financial economies Technical economies Marketing economies risk bearing economies research &development economies

External advantages Infrastructural Specialization Information and market Research &development.

BREAK Even Analysis

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