Chapter 4 Flashcards
What is business?
A business is an enterprise that brings individual’s, financial resources, and ecoomic resources together to produce a good or service for economic gain.
What is production?
Production is the process of transforming a set of resources into a good or a service that has eocnomic value.
What are inputs?
Inputs are the resources used in production.
What are outputs?
Outputs are the quantity of a good or service that results from production.
What is a labour-intenstive process?
A labour-intensitive process is a production process that employs more labour and less captial.
What is a captial-intensitive process?
A captial-intensive process is a production process that employs more captial and less labor.
What is productive efficiency?
Productive efficiency is making a given quantitiy of output at the lowest cost.
What are explicit costs?
Explicit costs are payments made by a business to businesses or people outside of it.
What are implicit costs?
Implicit costs are the owner’s opportunity costs of being involved with a business.
What are normal profits?
Normal profits are the miniumn return nesscary for owners to keep funds and their entrepreturial skills in their businesses.
What is economic costs?
Economic costs are a business’s total explict and implict costs.
What is accounting profit?
Accounting profit is the excess of a business’s total revenue over its explicit costs.
What is economic profit?
Economic profit is the excess of a business’s total revenue over its economic costs.
What are fixed inputs?
Fixed inputs are inputs whose quanitites cannot be adjusted in the short run.
What are variable inputs?
Variable inputs are inputs who quanitities can be adjustfed in the short run.
What is the total product?
The total product is the overal quanitity of output produced with a given workfroce.
What is the average product?
The average product is the qunitity of output produced per worker.
What is the marginal product?
The marginal product is the extra output produced by an additional worker.
What is the law of diminishing marginal returns?
The law of dmisinhing marginal returns explains that at some point, as more units of a variable input are added to a fixed input, the marginal product will start to decrease.
What are fixed costs?
Fixed costs are economic costs for inputs that remain fixed at all quanitties of output.
What are variable costs?
Variable costs are economic costs for inputs that vary at each quanitity of output.
What is the total cost?
The total cost is the sum of all fixed and variable costs at each quanitity of output.
What is the marginal cost?
The maringal cost is the extra cost of producing an additional unit of output.
What is the avergae fixed cost?
The average fixed cost is the fixed cost per unit of output.
What is the average variable cost?
The average variable cost is the variable cost per uit of outout.
What is the average cost
The average cost is the sum of the average cost and average variable cost at each quanitity of output.
What are increasing returns to scale?
Increasing returns to scale is a situation in which a percentage increase in all inputs causes a larger percentage increase in output.
What are constant returns to scale?
Constant returns to scale is a situation in which a percentage increase in all inputs results in an equal percentage increase in outpt.
What are decreasing returns to scale?
Decreasing returns to scale is a situation in which a percentage increase in all inputs causes a smaller percentage increase in output.
What is the long-run average cost?
The long-run average cost is the minium short-run average cost at each possible level of output.
What are economies of scope?
Economics of scope are the cost advantage related to a single business producing different products.
