Background To Supply

Question 1

Short run theory of production

Answer 1

Profit = revenue - costs

Short run - one factor fixed
Long run- all factors fixed

Cost types

Fixed (rental,cost of leasing equipment )and variable costs of raw materials, packaging wages of part time staff or employees working by the hour)
Total and average and marginal

Question 2

Short run and long run

Answer 2

Short run period of production which some inputs cannot be varied

Long run
All inputs can be varied

Question 3

Short run theory of production

Answer 3

Total product TP

Average product (AP)
TP/  Qv

Marginal product
Change in TP/ change in QV

Question 4

Law of diminishing returns

Answer 4

When increasing amounts of variable factors are used wth a given amount of a fixed factor there will come a point when each extra unit of the variable factor will produce less extra output than the previous unit

Question 5

Cost types

Answer 5

Total cost TVC+TFC

average cost TC/Q

Marginal change in TC / change in Q