# Shared Flashcard Set

## Details

Exam 1 (Ch. 7-9)
N/A
35
Accounting
09/30/2013

Term
 Total Physical Product
Definition
 output or yield is often called total physical
Term
 Average Physical Product
Definition
 The average amount of output produced per unit of input used
Term
 Marginal Physical Product
Definition
Term
 Marginal revenue
Definition
 change in revenue from producing and selling one more unit of output
Term
 Marginal Cost
Definition
 change in cost from producing one more unit
Term
 MC and MR profit max decision rule
Definition
 MR=MC
Term
 If output and input prices are constant...
Definition
 then MPP should equal the input price/output price
Term
 MVP (Marginal Value Product)
Definition
 change in revenue from increasing input use by one unit-How does the input add value to the product marginally????
Term
 Marginal Input Cost
Definition
 The cost of buying one more unit of input
Term
 Decision rule for MVP and MIC
Definition
 MVP=MIC
Term
 Equal Marginal Principal
Definition
 an input may be limited so that the profit-max point cannot be reached for all possible uses
Term
 CHAPTER SEVEN IS DONE
Definition
 BITCHES
Term
 Input COMBOS
Definition
 manager must choose which input combos are the most profitable, bc most products require more than one input
Term
 Input Substitution ratio
Definition
 Tells you which type of input substitution you have (easily seen when graphed) and whether not substitution is even possible
Term
 decision rule about Input substitution ratio
Definition
 input substitution ratio=input price ratio
Term
 Input Substitution ratio
Definition
 Tells you which type of input substitution you have (easily seen when graphed) and whether not substitution is even possible
Term
 decision rule about Input substitution ratio
Definition
 input substitution ratio=input price ratio
Term
 Constant rate of substitution
Definition
 all of one input or nothing of the other to get least-cost
Term
 Decreasing rate of stubstituion
Definition
 least-cost option will include some of each input
Term
 Enterprises and what a manager needs to know
Definition
 an enterprise is essentially the processes of making a product, and all that goes into it.A farm manager often has the ability to produce more than one goodThis means he/she must choose which combination will be the most profitable, while taking into account the amount of resources available for each and the limits that come with that
Term
 Types of Enterprise relationships
Definition
 *determine this to figure out which combo of enterprises to produceCompetitiveSupplementaryComplementary
Term
 Competitive enterprises
Definition
 one enterprise's output cannot increase w/out decreasing another enterprise's output
Term
 Supplementary enterprises
Definition
 one enterprise's output can increased w/out affecting the other enterprise's output
Term
 Complementary enterprises
Definition
 as one enterprise's output increases, so does the other
Term
 Competitive enterprises may have what two kinds of substitution?
Definition
 Increasing or constant
Term
 output substitution ratio tells you...
Definition
 the ratio of what you lost and the output of what you gained
Term
 Output Profit Ratio tells you...
Definition
 the ratio of how much money you made from increasing one enterprise and decreasing another
Term
 Decision Rule for output sub ratio and output price ratio
Definition
 output substitution ratio= output ratio
Term
 Opportunity Costs
Definition
 -not included in accounting expenses-must take into account when hiring and/or using technology-once an input has been acquired, it may have one or more alternative uses*decide which alternative is the most profitable
Term
 In what kinds of areas do you run into opportunity cost decisions?
Definition
 -labor-management-capital
Term
 Cash & noncash expenses
Definition
 -further classification of fixed costs
Term
 examples of cash expenses
Definition
 anything cash is used to pay for!!! (not an opportunity cost issue) Sometimes interest and insurance (if risk of loss is assumed by company)
Term
 examples of noncash expenses
Definition
 -any time an opportunity cost is in question-some variable costs-insurance (if risk of loss is assumed by owner)
Term
 short run
Definition
 that period in which the available quantity of one or more production inputs is fixed and cannot be changed
Term
 long run
Definition
 that period during which the quantity of all necessary productive inputs can be changed
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