Economics 200: Technology and Incentives

These flashcards cover key concepts related to Technology and Incentives in ECON 200, focusing on production functions, technology choices, and economic models.

Production Function

A relationship that tells us how much output will be produced given the amount of inputs used.

Factors of Production

The inputs into the production process, including machines, labor, and energy.

Constant Returns to Scale

When doubling all inputs results in doubling output as well.

Fixed-Proportions Technology

A type of technology where inputs are used in a fixed ratio to produce output.

Innovation Rents

Additional profit earned by a firm when adopting a new technology.

Average Product of Labor (APL)

Output produced per worker, calculated as Total Output divided by Number of Workers.

Endogenous Variables

Variables whose values are determined by relationships built into the economic model.

Exogenous Variables

Variables whose values are determined outside the economic model.

Ceteris Paribus

A Latin phrase meaning 'holding all else equal' to isolate the effect of one variable.

Iso-Cost Lines

Lines showing all combinations of inputs that cost the same amount.

Malthusian Model

A model predicting that living standards won't change unless an external force causes them to change.