question
TPP (Total Physical Product)
answer
The total amount of output produced by a given level of a variable input
question
MPP (Marginal Physical Product)
answer
The additional output that can be produced by adding one more unit of specific input, CETERIS PARIBUS
MPP = Change TPP/Change X = TPP2-TPP1/ X2-X1
MPP = Change TPP/Change X = TPP2-TPP1/ X2-X1
question
APP (Average Physical Product)
answer
The average amount produced by each unit of a variable factor of production
APP= TPP/X
APP= TPP/X
question
Stage 1
answer
TPP is increasing
APP is increasing
MPP increases, reaches a maximum & begins diminishing
APP is increasing
MPP increases, reaches a maximum & begins diminishing
question
Stage 2
answer
TPP is increasing
APP is decreasing
MPP is decreasing and less than APP, but still positive
Rational stage of production
APP is decreasing
MPP is decreasing and less than APP, but still positive
Rational stage of production
question
Stage 3
answer
TPP is decreasing
APP is decreasing
MPP decreasing and negative
APP is decreasing
MPP decreasing and negative
question
Total Value Product (TVP)
answer
The total value of output
TVP = TPP*Price
TVP = TPP*Price
question
Marginal Value Product (MVP)
answer
The value of additional output from an additional unit of input
MVP = MPP*Price
MVP = MPP*Price
question
Fixed Cost (FC)
answer
Costs that DO NOT change as output changes
question
Variable Costs (VC)
answer
Costs that change with the level of output
question
Total Costs (TC)
answer
TC=FC+VC
question
Key Cost Relationships
answer
Average Fixed Cost (AFC) = TFC/output
Average Variable Cost (AVC) = TVC/output
Average Total Cost (ATC) = TC/output or AFC+AVC
Marginal Cost (MC) = changeTC/ Change(output)
Average Variable Cost (AVC) = TVC/output
Average Total Cost (ATC) = TC/output or AFC+AVC
Marginal Cost (MC) = changeTC/ Change(output)
question
Revenue
answer
Total Revenue
TR= Price X Quantity
Average Revenue
AR= TR/ output
TR= Price X Quantity
Average Revenue
AR= TR/ output
question
Marginal Revenue
answer
Marginal Revenue (MR)
MR = changeTR/change(output)
MR = changeTR/change(output)
question
Profit Maximizing Rule
answer
Product output where MC=MR
question
Breakeven point
answer
MC (marginal cost) = ATC (average total cost)
question
Shutdown point
answer
MC (marginal cost) = AVC (average variable cost)
question
Short Run Decision
answer
Above shutdown price- covering some of fixed costs
Short-run Supply Curve is the MC curve above the AVC curve
Short-run Supply Curve is the MC curve above the AVC curve
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
