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marginal product
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the additional amount of output that is produced if a particular input was increased by one unit while holding all other inputs constant
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average product
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is the total amount of output divided by a particular input
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characteristics of indifference curves
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slopes downward due to tradeoffs
they correspond to higher utility levels
are usually smooth
they do not cross
it becomes flatter as you move to the right
they correspond to higher utility levels
are usually smooth
they do not cross
it becomes flatter as you move to the right
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Marginal Rate of Substitution (MRS)
answer
is the trade off that a person is willing to make between two goods
it is the slope of the indifference curve
it falls as we move to the right along the curve
it is the slope of the indifference curve
it falls as we move to the right along the curve
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opportunity cost
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Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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economic cost
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the out of pocket cost of an action plus the oppoturnity cost
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economic rent
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is a payment or other benefit received above and beyond what the individual would have received in his in his or her next best alternative
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marginal rate of transformation
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is the quantity of some good that must be sacrificed to acquire one additional unit of another good at any point it is the slope of the feasible frontier
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income effect
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the effect that the additional income would have if there were no change in the price or opportunity cost
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substitution effect
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the effect that is only due to changes in the price or opportunity cost, given the new level of utility
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characteristics of production function
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the function is upward
the function is curved ,starting with a steep slope that becomes flatter bcoz of diminishing returns , that is the production function has a diminishing marginal product
the function is curved ,starting with a steep slope that becomes flatter bcoz of diminishing returns , that is the production function has a diminishing marginal product
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the average product is diminishing when
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the marginal product of labour is diminishing
the production function is concave
the marginal product is smaller than the average product of labour
the marginal product is negative
the production function is concave
the marginal product is smaller than the average product of labour
the marginal product is negative
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indifference curves do not cross because
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there cannot be a point on a higher utility indifference curve that gives the same utility as a point on a lower utility indifference curves cannot cross
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