Factors of Production
Factors of production can be defined as a term that details everything that is used when goods or services are being manufactured, processed, or actualized. The aim of using the input is to make sure that there is an economic gain from the process. Some of these factors of production can include labor, land, capital, and the entrepreneurial process of the business activity (Dasgupta, 2010). The enterprise at this stage can be stated as putting all the above resources into use and trying to achieve an objective of materializing the production of the good or service. Land can represent all natural resources like soil, fish, oil, and the forests among others. Labor represents the physical energy put while capital is an investment enabled towards the whole activity. Getting the proper understanding of entrepreneurship proved as the considerable issue that needed better clarification as a unit of production.
When the physical aspects of production are compared between the inputs and outputs, the production function is achieved. In this case, the inputs are represented by factors of production as discussed earlier in the form of labor, land, capital, and the entrepreneurial process. Output on the other hand is the achieved result once production has been carried out. It depends on the input quantity, nature, and basis of production. It therefore can be either a good or service depending on the producer (Birolo, Foley, Kurz, Schefold, & Steedman, 2010). Production function addresses the main concern of efficiency in the average retail of both input and output when considered. It denotes the combination between outputs and inputs on efficiency basis. Defining the functionality in a simple manner is not easy as the term has to incorporate the necessary jargons that one cannot be well conversant with.
Marginal Product of Labor
Marginal product of labor is the realized change when a factor of output is held constant and others are changed according to their unit values. It also refers to the increased amount of unit output when labor is also added. As an input factor of production, labor takes the determinant role of change per a unit component of output. For every added unit of labor in the process of production, there is a subsequent unchangeable effect realized from the results of employed input. When determining the definition of the term, the major issue was getting the effect of the marginal change (Dasgupta, 2010). I experienced a difficult time getting to understand the order of changed result upon a differentiation factor of the labor. However, a formulation of the change can suffice as it shows the results from employment of an added labor unit.
Diminishing Marginal Product
The economic principle that checks on the effect of sustained change concerning increases in output when a corresponding input is placed refers to the diminishing marginal product. At the start, one input factor is increased while the level is maintained. On the other hand, the achievement is that the output also increases at the initial stage. If the same process is sustained, a limited effect will be felt (Dasgupta, 2010). There will also be a negative effect at an eventual stage where the output will not have any significant changes. It will be achieved if the input levels are kept the same without placing an initial target. The term is not well elaborated in meaning as it tales fro, the marginal product labor. Despite the proportion of production, the definition has to take note of a sustained effort by the law.
Value of the Marginal Product
For every kind of resource in the market, there is a particular value placed on the marginal product. It is usually calculated as price of the given product multiplied by resource’s marginal product. In addition, the revenue obtained from the proceeds can be defined as the positive sign on the feedback propagated. It is increased on the company’s total revenue after attributing it to input more (Dasgupta, 2010). The most logical expansion is the added use of the resource when changing the value to reflect an employment of unit resource. The increase can then be realized through using the revenue attained to increase the input and later on the product convert.
All the financial assets or valued deliveries that are held in accounts and are necessary for raising revenue are all referred to as customers. They can also take the form of tangible production equipment or machinery that can be found in facilities like factories and manufacturing premises. Capital can also take the form of storage area for all goods manufactured and produced. Other materials that fall on the category of swallowed entities when manufacturing the goods do not qualify as capital at any given time (Birolo, Foley, Kurz, Schefold, & Steedman, 2010). Capital can be converted into required finances to purchase all necessary measures for starting a commercial activity. The minimum requirements to start the process of input and output to generate profit are thus reliant on the capital from the beginning. When defining the term, I found that it is diverse depending on the setting of the required clarification. It can deviate from tangible to stored forms of assets while it changes from investment to an input unit.
Birolo, A., Foley, D., Kurz, H. D., Schefold, B., & Steedman, I. (2010). Production, Distribution and Trade: Alternative Perspectives. Hoboken: Taylor & Francis.
Dasgupta, P. (2010). Economics. New York, NY: Sterling.
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