Term
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Definition
| Transforming productive inputs into products of greater value. |
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Term
| Productive Inputs (Factors of Production) |
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Definition
| Resources used to produce goods and services. |
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Term
| Production Function (Description) |
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Definition
| The maximum amount of output that can be produced with a given set of inputs. |
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Term
| Production Function (Formula) |
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Definition
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Term
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Definition
| An input that does not vary with the quantity produced |
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Term
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Definition
| An input that varies with the quantity produced. |
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Term
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Definition
| The time horizon where some factors of production are fixed, and some are variable. |
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Term
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Definition
| The time horizon where all factors of production are variable. |
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Term
| Law of Diminishing Marginal Returns |
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Definition
| With a fixed input, and an increasing variable input, at some point the marginal product of the variable input must decline. |
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Term
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Definition
| The next best alternative given up when making a choice. |
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Term
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Definition
| A cost incurred in the past that cannot be reversed. |
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Term
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Definition
| Costs that do not vary with the quantity of units produced. |
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Term
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Definition
| Costs that vary with the quantity of units produced. |
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Term
| Short Run Cost Function (Description) |
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Definition
| The minimum possible cost of producing each level of output. |
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Term
| Short Run Cost Function (Formula) |
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Definition
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Term
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Definition
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Term
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Definition
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Term
| Marginal Cost (MC) (Description) |
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Definition
| The change in total cost attributable to the last unit produced |
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Term
| Marginal Cost (MC) (Formula) |
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Definition
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Term
| The range of Diseconomies of Scale |
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Definition
| The range where long run average total costs increase as output increases. |
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Term
| The range of Constant Returns to Scale |
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Definition
| The range where long run average total costs remain constant as output increases. |
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Term
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Definition
| The quantity of production that minimizes long run average total costs. |
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Term
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Definition
| A curve that shows all the input combinations that efficiently produce a given amount of output. |
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Term
| Marginal Rate of Technical Substitution (MRTS) |
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Definition
| The rate at which a producer can substitute between two inputs and maintain the same level of output. |
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Term
| Marginal Rate of Technical Substitution for L with K (MRTSlk) (Description) |
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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 |
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Term
| Marginal Rate of Technical Substitution (Formula) |
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Definition
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Term
| The concept of Returns to Scale |
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Definition
| The effect that a proportional change in all inputs has on the level of output. |
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Term
| The concept of Returns to Scale means |
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Definition
| The effect that a proportional change in all inputs has on the level of output. |
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