Term
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Definition
Assuming positive: A firm is able to produce more output using the same inputs or the same output using fewer inputs
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Term
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Definition
| At least one firm's inputs is fixed |
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Term
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Definition
| A firm is ale to vary all its inputs and can adopt new technology and increase or decrease the size of its physical plant |
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Term
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Definition
| Costs that change as output changes |
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Term
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Definition
| Costs that remain constant as output changes |
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Term
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Definition
Total Cost = Fixed Cost + Variable Cost
TC = FC + VC |
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Term
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Definition
| Relationship between the inputs employed by a firm and the maximum output it can produce |
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Term
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Definition
Equal to a firm's total cost divided by the quantity of output produced
[image] |
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Term
| Marginal Product of Labor (D) |
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Definition
| The additional output a firm produces as a result of hiring one more worker |
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Term
| Law of Diminishing Returns (D) |
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Definition
Adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will eventually cause the marginal product of a variable to decline.
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Term
| Average Product of Labor (D) |
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Definition
| The total output produced by a firm divided by the quantity of workers |
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Term
Whenever the marginal product of labor is greater than the average product of labor, the average product of labor must be increasing.
T/F |
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Definition
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Term
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Definition
The change in a firm's total cost from producing one more unit of a good or service
MC=dTC/dQ
[image] |
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Term
| Long run average cost curve |
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Definition
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