Unit 3 - Production, Cost, and the Perfect Competition Model Guide
3.7(7)
Studied by 588 people
View linked note
Learn
Practice Test
Spaced Repetition
Match
FlashcardsCard Sorting
1/29
Study Analytics
Name | Mastery | Learn | Test | Matching | Spaced |
|---|
No study sessions yet.
30 Terms
1
New cards
Constant returns to scale
output increase directly in proportion to an increase in all inputs (ex.
2
New cards
Fixed cost
cost that doesn’t change with amount of output produced
3
New cards
Long run
time period in which all inputs can be variable.
4
New cards
Rental rate
price of capital.
5
New cards
Production function
relation between the quantity of inputs a firm uses and the quantity of output it produces.
6
New cards
Capital
goods that are used to produce goods /services.
7
New cards
Marginal product
change in overall output when input changes.
8
New cards
Diminishing marginal returns
as input increases, the output of each input will be less than the previous input.
9
New cards
Profit
is the excess revenue that a business gets to keep.
10
New cards
Production function
relation between the quantity of inputs a firm uses and the quantity of output it produces
11
New cards
Fixed input
an input whose quantity doesnt change
12
New cards
Variable input
an input whose quantity can change
13
New cards
Long run
time period in which all inputs can be variable
14
New cards
Short run
time period in which at least 1 input is fixed
15
New cards
Marginal product
change in overall output when input changes
16
New cards
Diminishing marginal returns
as input increases, the output of each input will be less than the previous input
17
New cards
Output
quantity produced
18
New cards
Rental rate
price of capital
19
New cards
Capital
goods that are used to produce goods/services
20
New cards
Fixed cost
cost that doesnt change with amount of output produced (ex
21
New cards
Variable cost
cost that changes with amount of output produced
22
New cards
Marginal cost
cost difference of one additional unit of output (∆TC/∆Q)
23
New cards
Long run average total cost (LRATC)
same as short run ATC, but bigger
24
New cards
Economies of scale
LRATC declines as output increases
25
New cards
Diseconomies of scale
LRATC increaess as output increases
26
New cards
Constant returns to scale
output increase directly in proportion to an increase in all inputs (ex
27
New cards
Implicit cost
not an actual cost, a cost that you couldve been earning (ex
28
New cards
Marginal Revenue
additional revenue gained by producing one more unit
29
New cards
Exit rule
if P < ATC, exit the market
30
New cards
Shut down rule
a firm should not produce unless it can cover its variable costs
Flashcards (105)