Class 12 Economics — Chapter 3: Production and Costs

What you'll learn

• ▸Introduction to Production and Firms
• ▸The Production Function
• ▸Short Run and Long Run Production
• ▸Total Product, Average Product, and Marginal Product
• ▸The Law of Variable Proportions
• ▸Isoquants

Chapter Summary

--- PAGE 1 --- Chapter 3 Production and Costs In the previous chapter, we have discussed the behaviour of the consumers. In this chapter as well as in the next, we shall examine the behaviour of a producer. Production is the process by which inputs are transformed into ‘output’. Production is carried out by producers or **firms**. A firm acquires different inputs like labour, machines, land, raw materials etc. It uses these inputs to produce output. This output can be consumed by consumers, or used by other firms for further production. For example, a tailor uses a sewing machine, cloth, thread and his own labour to ‘produce’ shirts. A farmer uses his land, labour, a tractor, seed, fertilizer, water etc to produce wheat. A car manufacturer uses land for a factory, machinery, labour, and various other inputs (steel, aluminium, rubber etc) to produce cars. A rickshaw puller uses a rickshaw and his own labour to ‘produce’ rickshaw rides. A domestic helper uses her labour to produce ‘cle…

Practice Questions from this Chapter

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1. Compare ancient and modern production methods? Get Solution →
2. Show how to make production more efficient? Get Solution →
3. Define production costs simply? Get Solution →
4. What is the process by which inputs are transformed into 'output' called? Get Solution →
5. The difference between a firm's revenue and cost is called its what? Get Solution →
6. What is the term for the relationship between inputs used and the maximum quantity of output that can be produced? Get Solution →
7. What are the inputs that a firm uses in the production process called? Get Solution →
8. In production theory, what is the 'short run'? Get Solution →

Did you know?

• 💡 The world's largest factory building could fit 90 football fields inside it.
• 💡 Ancient Egyptians produced purple dye using crushed snails, needing 10,000 snails per gram.
• 💡 A single cotton plant can produce enough fiber for 250 pairs of jeans.
• 💡 The first industrial robot began working in a General Motors factory in 1961.
• 💡 Yeast microbes produce carbon dioxide that makes bread rise, acting as tiny factories.

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