question
profit formula
answer
profit = revenue - cost
question
revenue formula
answer
revenue = price * quantity
question
4 inputs
answer
labor, capital, land, materials
question
production function
answer
Q = f(inputs)
question
short run production function
answer
some of the inputs are fixed while others are flexible
question
marginal product
answer
change in output over change in input
question
average product
answer
quantity divided by labor input
question
firm
answer
entity that combines a set of inputs to produce a good or service for sale in a market
question
generic production function
answer
Q = f(L,K)
question
law of diminishing marginal returns
answer
if a firm increases one input while holding all others constant, the marginal product of the input will get smaller and smaller
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