Abstract writingRead the text and decide which statements given below are true or false. 1. The study of production helps in solving problems that are crucially important to the company. 2. Production implies allocation of resources to different manufacturing companies. 3. Providing services has nothing in common with production. 4. All sorts of activities related to providing goods and services are referred to as production. 5. Auding is not a part of production process. 6. Production theory is an integral part of managerial economics. 7. To employ capital resources efficiently is one of the production objectives. 8. Production does not deal with such problems as interrelations among output/revenue and output/cost components. Given the demand for its product, how does a firm determine the optimal level of output? Given several alternative production methods, how does the firm choose one? How will investment in new manufacturing equipment affect labor productivity and the unit costs of production? If the firm undertakes an expansion program to increase productive capacity, will its cost per unit be higher or lower after the expansion? These questions are critically important to the firm, and answers, or at least insights useful in analyzing the questions, are provided by the study of production. Production is concerned with the way in which resources (inputs) are employed to produce a firm’s products (outputs). The concept of production is quite broad and encompasses both the manufacture of physical goods and the provision of services. In both cases, production theory focuses on the efficient use of inputs to create outputs. In other words, production analysis examines the technical and economic characteristics of systems used to provide goods and services, with the aim of determining the optimal manner of combining inputs so as to minimize costs. It is worth emphasizing that the term, production refers to more than the physical transformation of resources. Production involves all the activities associated with providing goods and services. Thus, the hiring of workers (from unskilled labour to top management), personnel training, and the organizational structure used to maximize productivity are all part of the production process. The acquisition of capital resources and their efficient employment are also parts of production, as are the design and use of appropriate accounting control s systems. In addition to providing an important foundation for the understanding of costs and cost/output relations, production theory enhances one's comprehension of the integrated nature of the firm. Perhaps no other single topic in managerial economics so clearly lays out the interrelations among the various factors employed by the firm and among the functional components (for example, the output/revenue and output/cost components) in our valuation model of the firm.
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