Chapter 5- Section 2 Flashcards
What happens when more than one factor production is varied?
It becomes harder to gauge the impact of a single variable on total output
What does the law of Variable proportion state?
In the short run, output will change as one input is varied and others are held constant
A period of production that allows producers to change only the amount of the variable input called labor
Short run
A period of production long enough for producers to adjust the quantities of all their resources, including capital
Long run
A concept that describes the relationship between changes in output to different amounts of a single input while other inputs are held constant
Production function
Deals with the relationship between the factors of production and output of goods and services
Theory of production
What are raw materials?
Unprocessed natural products using production
What happens to resources if there are too few workers?
Too many resources per worker or resources are idle
What happens to output of dark too many workers?
Output decreases
What is marginal product?
Extra output or change in product caused by the addition of one more unit of variable input
At what point are changes in marginal product of special interest?
Optical number of variable units to be used in production
What are the stages of production based on?
Increasing returns, diminishing returns, and negative returns
What is the criterion for determining how long total output will rise?
Each new worker hired contributes more output than the worker before
When should companies stop hiring?
When they maximize their production
What happens to the rate of increase in total production during the stage? (Diminishing returns)
It increases in total production but it slows down
