Term
|
Definition
| The processes a firm uses to turn inputs into outputs of goods and services. |
|
|
Term
|
Definition
| A change in the ability of a firm to produce a given level of output with a given quantity of inputs. |
|
|
Term
|
Definition
| The period of time during which at least one of a firm's inputs is fixed. |
|
|
Term
|
Definition
| The period of time in which a firm can vary all of its inputs, adopt new technology, and increase or decrease the size of its physical plant. |
|
|
Term
|
Definition
| The cost of all the inputs a firm uses in production. |
|
|
Term
|
Definition
| Costs that can change as output changes. |
|
|
Term
|
Definition
| Costs that remain constant as output changes. |
|
|
Term
|
Definition
| The highest valued alternative that must be given up to engage in an activity. |
|
|
Term
|
Definition
| A cost that involves spending money. |
|
|
Term
|
Definition
| A non-monetary opportunity cost. |
|
|
Term
|
Definition
| The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs. |
|
|
Term
|
Definition
| Total cost divided by the quantity of output produced. |
|
|
Term
| Marginal Product of Labor |
|
Definition
| The additional output a firm produces as a result of hiring one more worker. |
|
|
Term
| Law of Diminishing Returns |
|
Definition
| The principle that, at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will casue the marginal product of the variable input to decline. |
|
|
Term
|
Definition
| The total output produced by a firm divided by the quantity of workers. |
|
|
Term
|
Definition
| The change in a firm's total cost from producing one more unit of a good or service. |
|
|
Term
|
Definition
| MC=(change in TC/change in Q) |
|
|
Term
|
Definition
| Fixed cost divided by the quantity of output produced. |
|
|
Term
|
Definition
| Variable cost divided by the quantity of output produced. |
|
|
Term
| Long-run Average Cost Curve |
|
Definition
| A curve showing the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed. |
|
|
Term
|
Definition
| The situation when a firm's long run average costs fall as it increases output. |
|
|
Term
| Constant Returns to Scale |
|
Definition
| The situation when a firm's long-run average costs remain unchanged as it increases output. |
|
|
Term
|
Definition
| The level of output at which all economies of scale are exhausted. |
|
|
Term
|
Definition
| The situation when a firm's long-run average costs rise as the firm increases output. |
|
|
Term
| Marginal Rate of Technical Substitution (MRTS) |
|
Definition
| The slope of an isoquant, or the rate at which a firm is able to substitute one input for another while keeping the level of output constant. |
|
|
Term
|
Definition
| A curve that shows all the combinations of two inputs, such as capital and labor, that will produce the same level of output. |
|
|
Term
|
Definition
| All the combinations of two inputs, such as capital and labor, and have the same total cost. |
|
|
