question
triple bottom line
answer
people, planet, profit
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cost-benefit analysis
answer
a study that compares the costs and benefits to society of providing a public good
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inputs
answer
additions to a given system
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outputs
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losses from the system
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marginal analysis
answer
the study of marginal decisions
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variable costs
answer
costs that vary with the quantity of output produced
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fixed costs
answer
...
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accounting costs
answer
explicit costs
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economic costs
answer
explicit costs + implicit costs
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production function
answer
the relationship between quantity of inputs used to make a good and the quantity of output of that good
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fixed input
answer
production factor that cannot be varied
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variable input
answer
an input whose quantity the firm can vary at any time
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short run
answer
the time period in which at least one input is fixed
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limiting factor
answer
factor that causes the growth of a population to decrease
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long run
answer
the time period in which all inputs can be varied
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total product curve
answer
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
answer
the increase in output that arises from an additional unit of input
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diminishing marginal returns
answer
a level of production in which the marginal product of labor decreases as the number of workers increases
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constant marginal returns
answer
a situation in which each successive unit of a variable input produces the same marginal product
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total cost
answer
fixed costs plus variable costs
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total cost curve
answer
shows how total cost depends on the quantity of output
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increasing marginal costs
answer
The principle that marginal costs eventually rise as quantity of output increases
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constant marginal costs
answer
the situation in which the cost of producing one additional unit of output stays the same as more output is produced
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decreasing marginal costs
answer
the situation in which the cost of producing one additional unit of output falls as more output is produced
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average cost
answer
the total cost divided by the quantity produced
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long-run average cost
answer
long-run total cost divided by output
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economies of scale
answer
factors that cause a producer's average cost per unit to fall as output rises
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constant returns to scale
answer
the property whereby long-run average total cost stays the same as the quantity of output changes
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diseconomies of scale
answer
increases in cost per unit when output increases
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minimum efficient scale
answer
the level of output at which all economies of scale are exhausted
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maximum efficient scale
answer
the highest quantity of output at which a firm achieves its minimum per-unit production costs
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input substitution
answer
increasing the use of some inputs, and decreasing that of others, while producing the same good or service
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