Cost Structures and Input Management in Economics

A collection of flashcards focused on key economic concepts related to cost structures, input management, and production efficiency.

Marginal Value

The additional value derived from consuming one more unit of a good or service.

Demand Curve Shift

Occurs when there is a change in consumer preference or external factors resulting in increased demand for a good.

Fixed Costs

Costs that do not change with the amount of output produced, such as rent or salaries.

Variable Costs

Costs that vary directly with the level of output, such as materials and labor costs.

Total Cost

The sum of fixed costs and variable costs for a given level of production.

Diminishing Marginal Product

A decrease in the incremental output gained from an additional unit of labor when all other inputs are constant.

Cost Minimization

The process firms use to produce a given level of output at the lowest possible cost.

Production Function

The relationship between the quantity of inputs used and the quantity of output produced.

Specialization in Production

A situation where workers or firms specialize in specific tasks, leading to increased productivity.

Spreading Effect

The phenomenon where fixed costs are spread over more units of output, leading to a decrease in average fixed costs.

Average Fixed Cost

Fixed cost per unit of output, which decreases as the quantity of output increases.

Marginal Cost (MC)

The cost of producing one additional unit of output, calculated as the change in total cost divided by the change in output.

Average Total Cost (ATC)

Total cost divided by the quantity of output, which reflects both fixed and variable costs.

Marginal Product of Labor

The additional output obtained from hiring one more worker.

Cost Structure

A framework that outlines the expenses a firm incurs through its operations, including fixed and variable costs.

Supply Curve Relation

Represents the relationship between the price of a good and the quantity supplied, often influenced by the cost structure of the firm.

Graphical Representation

A visual method to depict relationships in economics, such as demand and supply curves, and the associated costs.

Elasticity of Demand

A measure of how much the quantity demanded changes in response to a change in price.

Demand Shift

When there is a change in demand for a good without a change in price, often due to changes in consumer preferences or income.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Technical Efficiency

A measure of how effectively a firm uses its inputs to produce outputs without waste.