Chapter 21 Flashcards
Production Equations
The quantity of an output a firm produces
Total product
The total product divided by the total quantity of a variable input (labor)
Average Product
The change in total product due to change in the amount of a variable input
Marginal Product
As you add more and more variable input to a fixed input, marginal product will first increase and then decrease
Law of Diminishing Returns
the quantity of a variable input where marginal product reaches its maximum
Point of Diminishing Returns
Total money spent on fixed and variable inputs
Total costs
Total money spent on fixed inputs
Total fixed costs
Total money spent on variable inputs
Total variable costs
Total costs divided by quantity of output
Average total costs
Total average costs divided by the quantity of output
Average variable costs
The change in total costs divided by the change in quantity of output
Marginal Costs
Double all inputs get more than double the output
Economies of scale
Double all inputs get exactly double the output
Constant returns to scale
