1. Theory of Productivity-relationship between factors of production & the output of goods & services Short run-period in production that allows producers to adjust only one variable (labor) Long run-period in production that allows producers to adjust all of the other resources

2. Considerations by producers 1)Productivity-the amount of goods and services produced per unit of input 2)Costs

3. Productivity Companies calculate output in order to understand how it is affected by changes in input Total product (output)-all the product a company makes with a given amount of input during a given period of time Marginal product-the change in output generated by adding one more unit of input

4. Labor InputTotal ProductMarginal Product 000 110 25040 311060 417565 524570 632075 740080 848585 957590 10675100 11875200 12985110 131,00015 14975-25 15925-50 16825-100 LAW OF DIMINISHING RETURNS/VARIABLE PROPORTION Stage I/Increasing Marginal returns Stage II-DMR Stage III- NMR

5. Measures of Cost of Production/Inputs Fixed Costs-costs of production that do not change ie. Loans, rents, salaries (includes depreciation-lessening in value on capital goods) Variable Costs-costs of production that changes as the level of output changes ie. Raw material, wages Total Costs- the sum of the fixed and variable costs of a company Marginal cost-additional cost of producing one more unit of output (additional cost/number of additional units)