Economics: Production Function and Technology - Vocabulary Flashcards

Vocabulary flashcards covering key concepts from the lecture notes on output (y), production function, technology, cost of production, input types, slopes, and the role of relative prices and creative destruction in technology choice.

y (output)

Common symbol for total output in economics, representing the amount produced by a given production technology.

Production function

A relationship that shows how much output can be produced from a set of inputs given a particular technology.

Technology (in production)

A method or process that converts inputs into outputs; different technologies can produce the same output.

Two technologies producing the same output

Different production technologies that yield the same level of output but with different input requirements and costs; the choice depends on costs and prices.

Cost of production

Total cost incurred to produce a given level of output, typically consisting of labor cost plus costs of other inputs (e.g., energy).

Labor cost

Part of cost of production calculated as n × w, where n is the number of workers and w is the wage rate.

Labor-intensive technology

A technology that uses relatively more labor input per unit of output.

Energy-intensive technology

A technology that uses relatively more energy input per unit of output.

Delta (Δ)

A symbol representing change in a variable (e.g., Δy = change in y, Δn = change in the number of workers).

Slope (rise over run)

The rate of change of output with respect to input; in math, dy/dx, visualized as rise over run on a graph.

Input proportion

The fixed ratio of inputs used by a technology (e.g., labor to energy); when scaling inputs, the proportion remains the same.

Relative prices

The price relationship between inputs (such as wage vs. energy); changes in relative prices affect cost structures and technology choices.

Wage

The price of labor; the wage rate paid to workers.

Creative destruction

The process by which a drop in the price of a key input (e.g., energy) makes new, cheaper technologies profitable, leading to replacement of older methods.