1. Notebook # 21 - Economics 5-2 The Theory of Production

2. Economics 5-2 The Theory of Production Has the quality of your work ever declined because you worked too hard at something? Sometimes you reach a stage where you still make progress but at a diminished rate. ESSENTIAL QUESTION:

3. Economics 5-2 The Theory of Production GPS STANDARDS: SSEMI2- a.) define the law of supply and demand

4. Economics 5-2 The Theory of Production – –Whether they are film producers of multimillion dollar films like Titanic, The Dark Knight, OR Avatar – –small companies that market a single product – –suppliers face a difficult task……

5. Economics 5-2 The Theory of Production – –Producing an economic good or service requires a precise combination of land, labor, capital, and entrepreneurs.

6. Economics 5-2 The Theory of Production The theory of production deals with the relationship between these factors of production and the output of goods and services. The output of goods and services produces the supply

7. Economics 5-2 The Theory of Production The theory of production generally is based on the short run, a period of production that allows producers to change only the amount of the variable input called labor.

8. Economics 5-2 The Theory of Production This contrasts with the long run, a period of production long enough for producers to adjust the quantities of all their resources, including capital.

9. Economics 5-2 The Theory of Production For example, Ford Motors hiring 300 extra workers for one of its plants is a short-run adjustment. If Ford builds a new factory, this is a long-run adjustment.

10. Economics 5-2