economics chapter 8 untit 1
variable factor of production
A factor of production whose quantity can be changed during a particular period
factor of production
A factor of production whose quantity cannot be changed during a particular period
total product curve
Graph that shows the quantities of output that can be obtained from different amounts of a variable factor of production, assuming other factors of production are fixed.
marginal product
The amount by which output rises with an additional cost of a variable factor
marginal product of labor
The amount by which output rises with an additional unit of labor
average product
The output per unit of variable factor
long run
The planning period over which a firm can consider all factors of production as a variable.
production function
The relationship between factors of production and the output of a firm
short run
a planning period over which the managers of a firm must consider one or more of their factors of production as fixed in quantity
total variable costs (TVC)
is cost that varies with the level of output.
fixed costs
the costs associated with the use of fixed factors of production
variable costs
the costs associated with the use of variable factors of production
total fixed costs (TFC)
the costs that does not vary with output
law of diminishing marginal returns
the marginal product of any variable factor of production will eventually decline, assuming the quantities of other factors of production are unchanged.
negative marginal returns
the range over which additional units of a variable factor reduce total output, given constant quantities of all other factors
diminishing marginal returns
the range over which each additional unit of a variable factor adds less to total output than the previous unit
increasing marginal returns
the range over which each additional unit of a variable factor adds more to total output than the previous unit
average product of labor (AP)
the ratio of output to the number of units of labor
total cost (TC)
the sum of total variable cost and total fixed cost
average total cost (ATC)
total cost divided by quantity; it is the firm's total cost per unit of output
average fixed cost (AFC)
total fixed cost divided by quantity
average variable costs (AVC)
total variable cost divided by quantity; it is the firm's total variable cost per unit of output
