1. SEMINAR ON PRODUCTION
THEORY
BY
NEENU PAUL

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

3. They are the productive resources
required to produce a given product.these productive resources
are…….
1) Raw materials
2) Services of workers
3) Capital
4) Organising of work.
Generally the factors of production are
 LAND
 LABOUR
 CAPITAL

4. DEFNITIONS
 LAWS OF PRODUCTION
Generalization governing relationship between input
&output.
 PRODUCTION FUNCTION
Relationship between input and output of a firm
 THEORY OF POPULATION
Which govern the supply of labour.

5. THE BASIC BIOLOGY OF THE
MODEL
The 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).

6.  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.

7.  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)=0
Hence P=K/2

8. THE BIOLOGICAL PRODUCTIVITY
CURVE.
Maximum growth
g
r
o
w
t
h
k2
 Population size x

9. THE EFFECT OF FISHING-The short
run.
 Having consider the unexploited fish stock
 Now introduced fishing
 It 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).

10. FISHING EFFORT
 Economists 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 “

11.  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 .

12.  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.

13. POPULATION SIZE
 From 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 .

14.  y
 sryf3
Yield sryf2
sryf3
x
production size

15. 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.

16. SUSTAINABLE YIELD CURVE
 MSY
G
R
O
W
T
H
ECC/2 EFFORT
POPULATION

17. SUSTAINABLE YIELD CURVE
 It 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 .

18. SHORT RUN YIELD WITH
DIMINISHING RETURNS TO
NOMINAL EFFORT
Maximum possible short-run catch
population size grown
yield
x
Nominal effort

19. 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.

20. THE IMPACT OF FISHING ON THE
POPULATION SIZE
Y
G Growth curve
R SRY
O
W
T
H
X
POPULATIO P2 ECC
N

21. BIOECONOMIC EQULIBRIUM
 OPEN-ACCESS.
 TOTAL REVENUE EXEEDS TOTAL COST

22. THE ECONOMICS OF FISHING COST
 TCf=Cf.
 C is the constant.
 Ac ,mc is straight forward
 Acf=MCf=c
Y TCF=CF
c
o
s
t
ACF=MCF
effort X

23. FIGURE
r Tc f1
c e
o v
s e Tc f2
t n
u
e
TRf
effort
c r
o e
s v
t e AC2=MC2
n
MR
u
e effort AR

24. Thank you