Production Economics

Are you maximising your profits?

Getting the most profitable results from your farm business requires a careful balance of input costs to produce the optimum yield.

Key Points

• Every business has limited productive resources, including land, labour, management and capital.
• Production economics provides a framework for decision making about how best to use these limited resources to maximise profit.
• Maximising yield is not the most useful basis on which to make decisions about production.
• Understanding ‘marginal cost’ and ‘marginal return’ is very important when making production decisions.
• It is critical to know the impact of increasing inputs on working capital – does it limit your ability to do other things?

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• 361.10 kbProduction Economics fact sheetGetting the most profitable results from your farm business requires a careful balance of input costs to produce the optimum yield.