It states that the cost of the product is resolute by the sum total of the cost of all the resources which went into making it.
The theory of production is an attempt to exaplain the principles by which a business firm conclude how much of each asset that it sells. In other words it simply means its output or products.
It produces how much of of raw materials, fixed capital good etc are used.
It deals with the relationship between the factors of production and the output of goods and services. Whereas the theory of cost means that rhe cost of the business ehich highly determines its supply and spendings. It looks like the concept of cost in this theory, average cost and many more.
Seven factors of Production:
- Land and natural resources.
- Raw materials.
- Helps in the determining the profit maximising output.
- It depends upon the average cost of production additionally demand conditions.
- It also explains the flawless combinations of factors so as to diminish the cost of production by a firm.
- The principles in which the business has to take decisions on how much of each asset it sells and how much it produces and how much of raw material that is tells
about the fixed capital and labour.
- Helps in determining the profit exert outputs which depends upon the average cost of production.
- The producers understands the cost and potential revenue correlate with each venture and manage it.
- It describes the frontier represnting the limit of output obtained by the each inputs.
- It also provides information regarding increasing or decreasing returns of scale and the product of labor and capital.
- Product is of usually high quality.
- Producers meet individual customer needs.
It is mainly dependa upon the outputs or products it will produce and how much of raw material is used.
The product is of high quality. Producers meet individual customer need.