"Scale of Production" refers to the ratio of factors of production. This ratio can change because of availablity of factore. The scale of production is an important fact (or) affecting the cost of production.

(i) Law of supply is associated with production analysis.
(ii) It explains the positive (or) direct relationship between Price and Quantity supply.

(i) The man behind organizing the business is called as 'Organizer' or 'Entrepreneur'
(ii) An organiser is the most important factors of production.

(i) The iso-cost line must be tangent to iso-quant curve,
(ii) At point of tangency, the iso-quant curve must be convex to the origin.

(i) Iso-cost line represents a combination of inputs which show the same amount of cost.
(ii) It gives information on factor prices and financial resources of the firm.

(i) Production function refers to the relationship among units of the factors of production (inputs) and the resultant quantity of a good produced (output).
(ii) Q = f(N, L, K, T);
Q = Quantity of output, N = Land, L = Labour, K = Capital, T = Technology

(i) Land and labour are the primary factors.
(ii) Capital and organisation are the secondary factors.

The law states that if all other factors are fixed and one input is varied in the short run, the total output will increase at an increasing rate at first instance, be constant at a point and then eventually decrease. Marginal product will become negative at last.
According to G. Stigler, 1/ As equal increments of one input are added, the inputs of other productive services being held constant, beyond a certain point, the resulting increments of product will decrease, i.e., the marginal product will diminish".
Assumptions:
(i) Only one factor is variable while others are held constant.
(ii) All units of the variable factors are homogeneous.
(iii) The product is measured in physical units.
(iv) There is no change in the state of technology.
(v) There is no change in the price of the product.

(i) Price of commodity.
(ii) Price of the other commodity.
(iii) Price of factors.
(iv) Price expectations.
(v) Technology.
(vi) Natural factors
(vii) Discovery of new raw materials.
(viii) Taxes and Subsidies.
(ix) Objective of the firm.

Total Product:
(i) It refers to the total amount of commodity produced by combination of all inputs in a given period of time.
(ii) It can be calculated in two ways
TP = AP x N (or) AP = TP / N
Average Product:
(i) It refers to the output per unit of the input (or) 
\(AP=\frac { TP }{ Q } (or)N\)
(ii) It is the result of the total product divided by the total output.

(i) Charles Cobb and Paul Douglas have given a linear homogeneous production function.
(ii) A proportionate increase in the factors leads to a proportionate increase in output.
(iii) There is constant returns to scale with only labour and capital.
(iv) The elasticity of substitution between the factors is one.
Q = AL^{\(\alpha \)}K^{\(\beta \)}
Q = output; A = positive constant; K = Capital; L = Labour, \(\alpha \) + \(\beta \) = 1

Producer's equilibrium happens when there is maximum output with minimum cost ie. optimum combination of the factors of production.
The two conditions to be fulfilled are
1. The iso-cost line must be tangent to iso-quant curve.
2. At the point of tangency, iso-quant must be convex and MRTS_LK must be declining.

3. The producer is in equilibrium at E.
Slope of iso-quant curve = Slope of iso-cost curve.

Initiation: He considers the situation and availability of resources and plans the process of production.
Innovation: He introduces new methods in the production process.
Co-ordination: He uses a particular combination of the factors of production.
Control, direction & supervision: He directs the factors to get better results and supervises for the efficient functioning of all factors.
Risk taking, uncertainty bearing: Risk is insured, uncertainties cannot be insured.

Land is a primary factor of production.
1. It is a passive factor.
2. It is a free gift of nature.
3. It has no cost of production.
4. Its supply is inelastic.
5. It is permanent. 
6. It is immovable.
7. It is heterogeneous.
8. The fertility differs.
9. It has alternative uses.
10. It faces law of diminishing returns.

Introduction:
(i) Scale of production refers to the ratio of factors of production.
(ii) Every producer wants to reduce the cost of production.
(iii) When there is large scale production he enjoy lot of advantages.
(iv) These advantages are called economies of scale.
(v) Marshall divided them into internal economies and external economies.
Internal Economies:
They refer to advantages enjoyed by a firm.
Technical Economies:
When there is large scale production, there is more capital, new technology, research and development.
Financial Economies:
Big firms can float shares in the market for capital expansion.
Managerial Economies:
(i) Specialisation of labour is followed.
(ii) There is delegation of work.
Labour Economies:
(i) There is division of labour.
(ii) Quality and productivity increases.
Marketing Economies:
(i) Producers can buy raw materials at cheaper cost.
(ii) Transport cost is less.
(iii) They enjoy bargaining power.
Economies of survival:
(i) Product diversification is possible.
(ii) This reduces the risk in production.
(iii) Even if the market for one product falls, the market for other commodities offsets it.
External Economies:
(i) They refer to changes in any factor outside the firm causing an improvement in the production process.
(ii) These advantages are enjoyed by all the firms in the industry due to the structural growth.
Example:
1. Increased transport facilities.
2. Banking facilities.
3. Development of townships.
4. Development of information and communication.

Iso and quant are derived from the Greek language, meaning 'equal' and 'quantity'.
Definition:
Isoquant curve is a locus of points representing various combinations of two inputs capital and labour yielding the same output. It is also called equal product curve or product indifference curve.
Properties:
1. The isoquant curve has negative slope:
(i) Capital is being substituted by labour.
(ii) Isoquant has negative slope because of diminishing MRTS.
(iii) Constant MRTS (straight line) and increasing MRTS (concave) are also possible.
(iv) It depends on the nature of isoquant curve

2. Isoquant curve is convex to origin:
The capital substituted per unit of labour goes on decreasing so the isoquant is convex to the origin.

3. Isoquant curves cannot intersect each other:
Point A lies on IQ₁ and IQ₂, Point C lies on IQ₂, showing higher output Point B
lies on IQ₁, showing lower output. C = A, B = A But C > B.


4. Upper isoquant curve represents a higher level of output:
Higher IQ₂ shows higher output 200 units. Lower IQ₁ shows lower output 100 units. IQ₂ means the use of more sectors than IQ₁. Arrow shows increase in output with a right and upward shift of an isoquant curve.

5. Isoquant curve does not touch either x axis or y axis:
In IQ₂ only capital is used and in IQ₁ only labour is used.

Conclusion:
These are the properties of isoquant curves.