Production Flashcards
1
Q
What is a firm
A
An organisation which converts inputs (labour, materials and capital) into outputs
2
Q
What are capital services (K)
A
The use of long lived inputs such as land, buildings and equipments
3
Q
What are materials (M)
A
Natural resources and processed products consumed in producing the final product
4
Q
What are labour services (L)
A
Hours of work provided by managers and workers
5
Q
What assumptions are made about firms in this module
A
It is assumed that the firm owners want to maximise profits
6
Q
What does the production function show
A
The maximum amount of output that can be produced from a given combination of inputs
7
Q
Explain short-run production
A
- It is easier for firms to adjust inputs in the long run than the short run
- It is assumed that in the short run, capital is fixed
8
Q
What is output (q) also called
A
The total product of labour
9
Q
What is the marginal product of labour
A
- The additional output produced by an additional unit of labour (other factors held constant)
- 〖𝑀𝑃〗_𝐿=𝜕𝑞/𝜕𝐿=𝜕𝑓(𝐿,𝐾 )/𝜕𝐿
10
Q
A
