Production Functions Flashcards
What is scarcity?
The idea that resources are limited
What is the impact of workers having more free time on the country’s GDP per capita?
The more free time workers have, the higher the GDP per capita
What is the definition of labour?
The number of hours engaged in producing work
What do production functions show?
How inputs translate into outputs, holding other factors constant
What are the two things that can be found with production functions?
Marginal product: change in output per unit of change (evaluated at a certain point)
Average product: output per unit of input (found by the gradient of the curve)
What can be found by comparing average product values?
The most effective amount of time for productivity
What is happening if the marginal product is decreasing as input is increasing?
Diminishing marginal product
