Term

Definition
Transforming productive inputs into products of greater value. 


Term
Productive Inputs (Factors of Production) 

Definition
Resources used to produce goods and services. 


Term
Production Function (Description) 

Definition
The maximum amount of output that can be produced with a given set of inputs. 


Term
Production Function (Formula) 

Definition


Term

Definition
An input that does not vary with the quantity produced 


Term

Definition
An input that varies with the quantity produced. 


Term

Definition
The time horizon where some factors of production are fixed, and some are variable. 


Term

Definition
The time horizon where all factors of production are variable. 


Term
Law of Diminishing Marginal Returns 

Definition
With a fixed input, and an increasing variable input, at some point the marginal product of the variable input must decline. 


Term

Definition
The next best alternative given up when making a choice. 


Term

Definition
A cost incurred in the past that cannot be reversed. 


Term

Definition
Costs that do not vary with the quantity of units produced. 


Term

Definition
Costs that vary with the quantity of units produced. 


Term
Short Run Cost Function (Description) 

Definition
The minimum possible cost of producing each level of output. 


Term
Short Run Cost Function (Formula) 

Definition


Term

Definition


Term

Definition


Term
Marginal Cost (MC) (Description) 

Definition
The change in total cost attributable to the last unit produced 


Term
Marginal Cost (MC) (Formula) 

Definition


Term
The range of Diseconomies of Scale 

Definition
The range where long run average total costs increase as output increases. 


Term
The range of Constant Returns to Scale 

Definition
The range where long run average total costs remain constant as output increases. 


Term

Definition
The quantity of production that minimizes long run average total costs. 


Term

Definition
A curve that shows all the input combinations that efficiently produce a given amount of output. 


Term
Marginal Rate of Technical Substitution (MRTS) 

Definition
The rate at which a producer can substitute between two inputs and maintain the same level of output. 


Term
Marginal Rate of Technical Substitution for L with K (MRTSlk) (Description) 

Definition
The number of units of capital a producer can give up in exchange for one unit of labor while maintaining the same level of output 


Term
Marginal Rate of Technical Substitution (Formula) 

Definition


Term
The concept of Returns to Scale 

Definition
The effect that a proportional change in all inputs has on the level of output. 


Term
The concept of Returns to Scale means 

Definition
The effect that a proportional change in all inputs has on the level of output. 

