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21 Cards in this Set
- Front
- Back
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Production function
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the relationship between the quantity of inputs a firm uses and the quantity of output it produces.
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fixed input
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input where the quantity is fixed and can't be varied.
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variable input
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input where the quantity can vary.
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long run
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time period where all inputs can be varied
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short run
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time period where at least 1 input is fixed
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total product curve
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shows how the quantity of output depends on the quantity of the variable input for a given quantity of the fixed input.
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marginal product
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the additional quantity of output that is produced by using one more unit of that input.
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diminishing returns to an input
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when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input.
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fixed cost
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cost that doesnt depend on the quantity of output produced. it is the cost of the fixed input.
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variable cost
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a cost that depends on the quanity of output produced. it is the cost of the variable input.
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Total cost
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fixed cost + variable cost
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Total cost curve
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shows how total cost dpeneds on the quantity of output.
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Average total cost
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total cost/total output
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u shaped average total cost curve
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falls at low levels of output then rises at higher levels
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average fixed cost
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fixed cost/output
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Average variable cost
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variable cost/output
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minimum cost output
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the # of output when the average total cost is lowest. The min of the U shaped ATC curve
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long run atc curve
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the connectioin of all the short run atc curves
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economies of scale
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when the long run atc declines as output increases
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diseconomies of scale
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when the long run atc increases as output increases
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constant returns to scale
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whne the long run atc is constant as output increases
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