Boogaloo Pt 2

Question 1

Factors of production

Answer 1

Inputs to production (land, labor, capital, raw materials)

Question 2

Capital goods

Answer 2

Inputs to production that are themselves produced goods

Question 3

Financial capital

Answer 3

Money needed to start or maintain a business

Question 4

Physical capital

Answer 4

Produced factors of production

Question 5

Technological constraints

Answer 5

Only certain combinations of inputs are feasible ways to produce a given amount of output

Question 6

Production set

Answer 6

Set of all combinations of inputs and outputs that are technologically feasible to produce

Question 7

Production function

Answer 7

Boundary of the production set

Question 8

Isoquant

Answer 8

Set of all possible combinations of outputs that lead to a given amount of output

Question 9

Cobb douglas production function

Answer 9

Well-behaved functions that are asymptotic to both axes

Ax(1)(a)x(2)(b)

Question 10

Monotonic

Answer 10

Increase one input, output cannot fall

Question 11

Free disposal

Answer 11

Firm can costlessly dispose of any inputs, so extras cannot have negative value

Question 12

Convex

Answer 12

Weighted average produces as least as much output

Question 13

Marginal product

Answer 13

Additional output from a little more of one input, holding others constant

Question 14

TRS technical rate of substitution

Answer 14

How much of one factor is needed to compensate for losing another factor

Question 15

Law of diminishing marginal product

Answer 15

The marginal product of a factor will diminish as we get more and more of that factor, when all other inputs are held fixed

Question 16

Diminishing technical rate of substitution

Answer 16

Isoquants have a convex shape; tradeoffs less steep when inputs are roughly equal

Question 17

Short run

Answer 17

Some factors of production aren’t fixed

Question 18

Long run

Answer 18

All factors of production can be varied

Question 19

Constant returns to scale

Answer 19

Double the inputs, double the output

Question 20

Increasing returns to scale

Answer 20

Double the inputs, quadruple the output

Question 21

Decreasing returns to scale

Answer 21

Triple the inputs, double the output

Possibly forgot to account for fixed input (really short run phenomenon)

Question 22

Competitive market

Answer 22

Individual producers take prices as outside of their control

Question 23

Profits

Answer 23

R-C

Question 24

Opportunity costs

Answer 24

Cost of foregoing other opportunities

Question 25

Fixed factor

Answer 25

Factor that is in a fixed amount for the firm

Question 26

Variable factor

Answer 26

Factor that the firm can use in different amounts

Question 27

Quasi-fixed factors

Answer 27

Factors of production that must be used in a fixed amount, independent of the output of the firm, as long as the output is positive

Question 28

Isoprofit lines

Answer 28

All combinations of the input goods and output good that give a constant level of profit
Rearrange profit = priceoutput - costinputs