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Home Adam smith capital asset depreciation durable good economics goods non-renewable resource physical capital production service stock Production is a process of workers combining various material inputs and immaterial inputs plans, know-how in order to make something for consumption the output.

It is the act of creating output, a good or service which has value and contributes to the utility of individuals. The degree to which the needs are satisfied is often accepted as a measure of economic well-being. In production there are two features which explain increasing economic well-being.

They are improving quality-price-ratio of goods and services and increasing incomes from growing and more efficient market production. The most important forms of production are market production public production household production In principle there are two main activities in an economy, production and consumption. Similarly there are two kinds of actors, producers and consumers.

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  • Production is a process of workers combining various material inputs and immaterial inputs (plans, know-how) in order to.

Well-being is made possible by efficient production and by the interaction between producers and consumers. In the interaction, consumers can be identified in two roles both of which generate well-being. Consumers can be both customers of the producers and suppliers to the producers. Production output is created in the real process, gains of production are distributed in the income distribution process and these two processes constitute the production process.

The production process and its sub-processes, the real process and income distribution process occur simultaneously, and only the production process is identifiable and measurable by the traditional accounting practices. The real process and income distribution process can be identified and measured by extra calculation, and this is why they need to be analyzed separately in order to understand the logic of production and its performance.

The differences between the absolute and average performance measures can be illustrated by the following graph showing marginal and average productivity. The figure is a traditional expression of average productivity and marginal productivity. The maximum for production performance is achieved at the volume where marginal productivity is zero.

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The maximum for production performance is the maximum of the real incomes. In this illustrative example the maximum real income is achieved, when the production volume is 7.

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The maximum average productivity is reached when the production volume is 3. It is worth noting that the maximum average productivity is not the same as the maximum of real income.

A model [3] used here is a typical production analysis model by help of which it is possible to calculate the outcome of the real process, income distribution process and production process.

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The starting point is a profitability calculation using surplus value as a criterion of profitability. The surplus value calculation is the only valid measure for understanding the connection between profitability and productivity or understanding the connection between real process and production process. A valid measurement of total productivity necessitates considering all production inputs, and the surplus value calculation is the only calculation to conform to the requirement.

If we omit an input in productivity or income accounting, this means that the omitted input can be used unlimitedly in production without any cost impact on accounting results.

Home Adam smith capital asset depreciation durable good economics goods non-renewable resource physical capital production service stock Production is Raja Raja Kerajaan Singasari - seodiving. Raja Raja Kerajaan Majapahit:.

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