SEMINAR ON PRODUCTION THEORY

BY NEENU PAUL

THEORY OF PRODUCTOIN

PRODUCTIONProduction is related to supply of goods &services.Production is defined as “The creation of utility with creation or addition of value”.

FACTORS OF PRODUCTIONThey are the productive resourcesrequired to produce a given product.these productive

resources are…….1) Raw materials2) Services of workers3) Capital4) Organising of work. Generally the factors of production are LAND LABOUR CAPITAL

DEFNITIONS

LAWS OF PRODUCTIONGeneralization governing relationship between

input &output.PRODUCTION FUNCTIONRelationship between input and output of a

firmTHEORY OF POPULATIONWhich govern the supply of labour.

THE BASIC BIOLOGY OF THE MODELThe Gordon-schaefer(GS)model considers a single

fish stock in isolation and is concerned with the way in which the stock grows over a time. it is based upon the logistic growth model.

Let us suppose that we have an area of sea , we introduce a small fish population to it .The growth ,G , of the population P over a time period t’ will be a function of the initial size of the population ;That is,….

dp / dt=G=f(P).

Now the area of sea is relatively small.Suppose that to begin with , population growth will

be roughly proportional to the initial population ; that is,……

G= Ap .The constant a’ is called the intrinsic growth rate.Since any given area of sea is ,by definition, limited

in size ,there must be some maximum size of fish population that can be supported . this maximum is usually called the environmental carrying capacity(ECC).and is denoted by K.

As the fish population size approaches the ECC so crowding of the sea area will increasingly become a problem.

The growth rate,G, of the population may then be expected to fall,according to the degree of crowding..at any particular moment,the growth rate will be propotional to the difference between the ECC and the population at the time.this gives us the growth equation.

G=aP[(K-P)/K] =aP(1-P/K).In the absence of fishing ,the population size will be equal to

the ECC.Differentiating the equation and setting it equal to zero,we

must see that maximum growth of the fish stock occurs when the population size is half of the ECC;that is ,

G=a(1-2P/K)=0Hence P=K/2

THE BIOLOGICAL PRODUCTIVITY CURVE.

y

Maximum growth

x

growth

Population sizek2

THE EFFECT OF FISHING-The short run.

Having consider the unexploited fish stockNow introduced fishingIt is postulated that the yield Y.It depends on

two factors……..1. The size of the fish population at the

beginning.2. The amount of fishing effort f’. Y=y(P,f).

FISHING EFFORTEconomists think of effort in terms of the

boats, men, gear and so on that are required for the fishing activity this is usually termed as nominal effort.

Other word is effective fishing effort. F.Defined as “the fraction of the average

population taken by fishing “

The F is achieved by considering the propotion of the stock that survives fishing.

Precisely ,it is the negative of the natural logarithm of the proportion of fish surviving in a year.

F=qf.q=catchability coefficient.Clearly if q=1 then f and F are the same

thing and the analysis of fishing will be the same whichever is used .

We shall use nominal effort and our simple short –run yield equation becomes

Y=qfP.Here consider the way in which short-run

yield will change in response to change in effort and population size.

POPULATION SIZEFrom eqn Y=qfP the given level of nominal

effort,yield will vary linearly with population size .the greater is the population size,the greater will be the yield .

y sryf3

Yield sryf2

sryf3

x production size

DIMINISHING RETERN TO POPULATION SIZE Amount of nominal effort is given .Population size is increases,the given amount

of effort will be spread more thinly across the population

So ability to catch of the fish to be less .Here yield may rise less than proportionatly There for,short-run yield to be a non-linear

function of population size.Y=qfP.

SUSTAINABLE YIELD CURVE

MSY

EFFORTPOPULATION

ECC/2

GROWTH

SUSTAINABLE YIELD CURVEIt is simple quadratic function of effort .

It is simple mirror image of the biological productivity curve .It is to notice the difference between the two the former is defined with respect to effort . the later is respect to population .The origin of sustainable yield curve correspond to ECC on the biological productivity curve .

SHORT RUN YIELD WITH DIMINISHING RETURNS TO NOMINAL EFFORT

Maximum possible short-run catch population

size grown

yield

Nominal effort

x

THE EFFECT OF FISHING –THE LONG –RUN.

Here we must combine our biological production function with our yield function.

G=ap((1-P/K)Y=q fβp.At the beginning of the second period

therefore the population size must be ECC-Y.

THE IMPACT OF FISHING ON THE POPULATION SIZE

P2POPULATION

GROWTH

X

Y

ECC

SRYGrowth curve

BIOECONOMIC EQULIBRIUMOPEN-ACCESS.TOTAL REVENUE EXEEDS TOTAL COST

THE ECONOMICS OF FISHING COSTTCf=Cf.C is the constant.Ac ,mc is straight forwardAcf=MCf=c

cost

effort X

Y TCF=CF

ACF=MCF

FIGURErevenue

cost

Tc f1

Tc f2

TRf

effortrevenue

cost

effort

MR

AR

AC2=MC2

Thank you