Answer to Question #159804 in Microeconomics for jocelyn bantono

Question

theory of production

Answer 1

In economics, production theory explains the principles in which the business has to take decisions on how much of each commodity it sells and how much it produces and also how much of raw material ie., fixed capital and labor it employs and how much it will use. It defines the relationships between the prices of the commodities and productive factors on one hand and the quantities of these commodities and productive factors that are produced on the other hand.

Production is a process of combining various inputs to produce an output for consumption. It is the act of creating output in the form of a commodity or a service that contributes to the utility of individuals. In other words, it is a process in which the inputs are converted into outputs.