Break Even & Shutdown Point

Question 1

1. Law of diminishing returns

Answer 1

refers to the idea that as more and more of a factor (input) is used with at least one fixed factor there is some point at which the increase in output will be at a decreasing rate

Question 2

2. Marginal Production

Answer 2

measures the change in total production attributed to each additional worker/factor

Question 3

3. diminishing returns occur…

Answer 3

as marginal costs keep increasing and that each additional resource added to produvyion adds a decreased amount of output. As a result more resources than before are needed to increase output, meaning m.c rises

Question 4

4. Short run

Answer 4

a period of time in which no resources/factors of production are fixed

Question 5

5. long run

Answer 5

a period of time in which no resources/factors of production are fixed