Cost of production Flashcards
average cost ?
total cost / output
average fixed cost?
total fixed cost / output
average variable cost?
total variable cost / output
foxed costs?
business expense that does not vary directly with the level of output
What does the differance between ATC curve and AVC curve represent?
AFC
What is total product?
total output
What is average product?
measures output per worker employed or output per unit of capital
What is marginal product?
change in output from increasing the number of workers
What is law of diminishing returns?
as more units of a variable input are added to fixed amounts of land and capital, the change in total output will first rise and then fall
What type of concept is diminishing returns?
short run
What does the margin drive?
average
A change in fixed costs ….
has no effect on marginal costs. shift average costs
a rise variable costs of production leads to …
upward shift in marginal and average total cost
Key factors causing supply shifts?
- change in unit costs of production
- a fall in exchange rate
- advances in technology
- entry of new producers
- weather conditions
