question
Production
answer
the process by which inputs are combined, transformed, and turned into outputs
question
Firm
answer
an organization that comes into being when a person or group of people decides to produce a good or service to meet a perceived demand
question
Profit
answer
the difference between total revenue and total cost
question
Total Revenue
answer
the amount received from the sale of the product (q X P)
question
Total Cost
answer
the total of (1) out-of-pocket costs and (2) opportunity cost of all factors of production
question
Economic Profit
answer
profit that accounts for both explicit costs and opportunity costs
question
Normal Rate of Return
answer
A rate of return on capital that is just sufficient to keep owners and investors satisfied. For relatively risk-free firms, it should be nearly the same as the interest rate on risk-free government bonds.
question
Short Run
answer
the period of time for which two conditions hold: The firm is operating under a fixed scale (fixed factor) of production, and firms can neither enter nor exit an industry.
question
Long Run
answer
that period of time for which there are no fixed factors of production. Firms can increase or decrease the scale of operation and new firms can enter or existing firms can exit the industry
question
Optimal Method of Production
answer
the production method that minimizes cost for a given level of output
question
Production Technology
answer
The quantitative relationship between inputs and outputs
question
Labor-Intensive Technology
answer
Technology that relies heavily on human labor instead of capital
question
Capital-Intensive Technology
answer
Technology that relies heavily on capital instead of human labor
question
Production Function/ Total Product Function
answer
A numerical or mathematical expression of a relationship between inputs and outputs. It shows units of total production as a function of units of inputs
question
Marginal Product
answer
The additional output that can be produced by adding one more unit of a specific input
question
Law of Diminishing Returns
answer
When additional units of a variable input are added to fixed inputs, after a certain point, the marginal product of the variable input decreases.
question
Average Product
answer
The average amount produced by each unit of a variable factor of production.
question
Isoquant
answer
A graph that shows all the combinations of capital and labor that can be used to produce a given amount of output
question
Marginal Rate of Technical Substitution
answer
The rate at which a firm can substitute capital for labor and hold output constant
question
Isocost Line
answer
A graph that shows all the combinations of capital and labor available for a given total cost
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
