Production, Costs And Revenue Flashcards
1
Q
What are the three measures of production?
A
Total product: The total output of a firm
Average product: Output per unit of labour
Marginal product: Output change from adding a unit of labour or capital
2
Q
What is the law of diminishing returns?
A
As we add more units of a variable input to fixed amounts of land and capital, the change in the total output will initially increase before decreasing.
3
Q
What is the minimum efficiency scale (MES)?
A
The point on the long run average cost curve where no more economies of scale are possible but there are no diseconomies of scale
