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Exam 1 (Ch. 7-9)
N/A
35
Accounting
Undergraduate 3
09/30/2013

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Term
Total Physical Product
Definition
output or yield is often called total physical
Term
Average Physical Product
Definition
The average amount of output produced per unit of input used
Term
Marginal Physical Product
Definition
The addition TPP produced using an additional unit of input BITCHES
Term
Marginal revenue
Definition
change in revenue from producing and selling one more unit of output
Term
Marginal Cost
Definition
change in cost from producing one more unit
Term
MC and MR profit max decision rule
Definition
MR=MC
Term
If output and input prices are constant...
Definition
then MPP should equal the input price/output price
Term
MVP (Marginal Value Product)
Definition
change in revenue from increasing input use by one unit
-How does the input add value to the product marginally????
Term
Marginal Input Cost
Definition
The cost of buying one more unit of input
Term
Decision rule for MVP and MIC
Definition
MVP=MIC
Term
Equal Marginal Principal
Definition
an input may be limited so that the profit-max point cannot be reached for all possible uses
Term
CHAPTER SEVEN IS DONE
Definition
BITCHES
Term
Input COMBOS
Definition
manager must choose which input combos are the most profitable, bc most products require more than one input
Term
Input Substitution ratio
Definition
Tells you which type of input substitution you have (easily seen when graphed) and whether not substitution is even possible
Term
decision rule about Input substitution ratio
Definition
input substitution ratio=input price ratio
Term
Input Substitution ratio
Definition
Tells you which type of input substitution you have (easily seen when graphed) and whether not substitution is even possible
Term
decision rule about Input substitution ratio
Definition
input substitution ratio=input price ratio
Term
Constant rate of substitution
Definition
all of one input or nothing of the other to get least-cost
Term
Decreasing rate of stubstituion
Definition
least-cost option will include some of each input
Term
Enterprises and what a manager needs to know
Definition
an enterprise is essentially the processes of making a product, and all that goes into it.
A farm manager often has the ability to produce more than one good
This means he/she must choose which combination will be the most profitable, while taking into account the amount of resources available for each and the limits that come with that
Term
Types of Enterprise relationships
Definition
*determine this to figure out which combo of enterprises to produce
Competitive
Supplementary
Complementary
Term
Competitive enterprises
Definition
one enterprise's output cannot increase w/out decreasing another enterprise's output
Term
Supplementary enterprises
Definition
one enterprise's output can increased w/out affecting the other enterprise's output
Term
Complementary enterprises
Definition
as one enterprise's output increases, so does the other
Term
Competitive enterprises may have what two kinds of substitution?
Definition
Increasing or constant
Term
output substitution ratio tells you...
Definition
the ratio of what you lost and the output of what you gained
Term
Output Profit Ratio tells you...
Definition
the ratio of how much money you made from increasing one enterprise and decreasing another
Term
Decision Rule for output sub ratio and output price ratio
Definition
output substitution ratio= output ratio
Term
Opportunity Costs
Definition
-not included in accounting expenses
-must take into account when hiring and/or using technology
-once an input has been acquired, it may have one or more alternative uses
*decide which alternative is the most profitable
Term
In what kinds of areas do you run into opportunity cost decisions?
Definition
-labor
-management
-capital
Term
Cash & noncash expenses
Definition
-further classification of fixed costs
Term
examples of cash expenses
Definition
anything cash is used to pay for!!! (not an opportunity cost issue)
Sometimes interest and insurance (if risk of loss is assumed by company)
Term
examples of noncash expenses
Definition
-any time an opportunity cost is in question
-some variable costs
-insurance (if risk of loss is assumed by owner)
Term
short run
Definition
that period in which the available quantity of one or more production inputs is fixed and cannot be changed
Term
long run
Definition
that period during which the quantity of all necessary productive inputs can be changed
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