Chapter 7 Key Terms Flashcards
short run
period of time during which some of the firm’s cost commitments will NOT have ended
long run
period of time long enough for all of the firm’s current commitments to come to an end
fixed cost
cost of an input whose quantity does not rise when output goes up, one that the firm requires to produce any output at all. The total cost of such indivisible inputs does not change when the output changes.
variable cost
costs of a firm’s operation that are not fixed
total physical product (TPP)
the amount of output it obtains in total from a given quantity of input
average physical product (APP)
total physical product (TPP) divided by the quantity of input. Thus, APP = TPP/X, where X = the quantity of input
marginal physical product (MPP)
the increase in total output that results from a one-unit increase in the input quantity, holding the amounts of all other inputs constant
marginal revenue product (MRP)
the additional revenue that the producer earns from the increased sales when it uses an additional unit of the input
economies of scale (increasing returns to scale)
if, when all input quantities are increase by X percent, the quantity of output rises by more than X percent, then production involves this
