Question

describe the production decision made by firms.

Answer 1

Firsrly we have to know the meaning of production decision, production decision of a firms means It is a part of theory of a firm which describes how a firm makes cost minimizing production decisions.and tells about how the firms resulting cost varies with its output.

Now describing about the production decision made by firms are,

We can say that this is a part of Theory of a firm which describes how a firm makes cost minimizing production decisions and and firms resulting cost varies with output.

Now, production decision of a firm simply can be shown in 3 steps or stages like,  Consumer constraints, Production Technology, Input choice.

about the three steps

Consumer constraints

Cost constraints, firms in a particular must consider the prices of labour, capital and other inputs this is just because of a consumer is constrained by limiting budget.

So this producer hast to be concerned about the cost of its production.

Production Technology

This is one of the particular requirement way in describing how the inputs is like land, lobour, capital.which transformed into outputs like cars, tv etc..

Just buyers reaches to a certain level of satisfaction by buying different combination of goods and the firm can produce a particular level of output by having different combinations of inputs.

Input Choices

In input choice the firm choose the amount of input to be used in the production of each unit. Then consumers takes account of prices of different product defore their buy. So producers takes account of the prices of different inputs for production.

In this we can say that Price of input Directly proportional to price of output or final product.

price of input increases then the price of final product will also increase this leads to lower demand of that product.