54: The production function Flashcards
production function
relationship between quantity of inputs and quantity of outputs produced
fixed input
an input whose quantity is fixed for a period of time and cannot be varried
variable input
an input whose quantity the firm can change at any time
long run
time period in which all inputs can be varied
short run
time period during which at least one input is fixed
total product curve
shows how the quantity of output depends of the quantity of a variable input, given fixed amounts of all other inputs
marginal product
additional quantity of output produced using one more unit of that input
slope of total product curve
marginal product = change in quantity / change in input
diminishing returns to an input
when an increase in the quantity of a particular input, holding all other inputs fixed, leads to a decline in the marginal product of that input