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33 Cards in this Set
- Front
- Back
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A process by which resources are transformed into products or services that are usable by consumers.
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Production
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Producers face a threefold decision problem:
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1. What to produce
2. How much to produce 3. How to produce |
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a factor that can be used to produce a product that can satisfy a human want or desire.
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Resource (input)
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List the four basic categories of resources.
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Land
Labor Capital Management |
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The total quantity of a product that is produced at each level of variable input used.
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Total Physical Product (TPP)
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The amount added to TPP when another unit of variable input is used.
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Marginal Physical Product (MPP)
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Give the equation or MPP
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Change in output/ chance in input
= Change in TPP/ change in X1 = Change in Y/ change in X1 |
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Measures the units of output produced per unit of input for each level of variable input used.
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Average Physical Product (APP)
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Give the equation for APP.
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APP= Output/ input
= y/x = TPP/ x |
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The APP reaches its max at the level of input used, x, where what two things occur?
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1. A ray from the origin is tangent to TPP
2. MPP= APP |
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Define Stage 1
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1.irrational
2. APP increasing 3. TPP is increasing 3. MPP is greater than APP |
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Define Stage 2
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1. irrational
2. TPP is decreasing 3. MPP < 0 |
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Define Stage 3
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1. rational
2. TPP increasing 3. APP > MPP |
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The total value of output, y, produced at each level of variable input use.
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Total Value Product (TVP)
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Give the equation for TVP
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TVP= (TPP) (Py)
= TPP x Price of Y |
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Value of the output per unit of input for each level of variable input use
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Average Value Product
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Give the equation for AVP
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AVP= TVP/ X
= APP x Price of Y |
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Any activity or process that satisfies a human desire directly or indirectly, presently or in the future.
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Production
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The amount added to TVP when another unit of variable input is used.
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Marginal Value Product
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Give the equation of MVP
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MVP= MPP x Py
= Change in TVP/ change in x |
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amount that is added to total cost when another unit of variable input is used
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Marginal Factor Cost (MFC)
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Where do you maximize profit?
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MVP=MFC
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A factor that can be used to produce a product that can satisfy a human want or desire.
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Input or resource
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A factor that can be used to produce a product that can satisfy a human want or desire.
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Input or resource
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Output results from the particular set of resources used in some way.
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Production Funtion
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Y= f (X1, X2, X3...Xn)
This equation represents what? |
Production Function
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The shape of the total product curve tells us the change in _____ proportions. Explaining what?
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-input
-Law of diminishing returns |
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As succesive amounts of variable input are combined with a fixed input in a production process, the total product will increase, reach a maximum, and eventually decline.
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Law of diminishing returns
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Shows all the combonations of these inputs that can be used to produce a given quantity of output.
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Isoquant
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The rate at which resourcs substitute for one another
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Marginal Rate of substitution
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Since the isoquant for imperfect substitutes is a curving line, we face a ________ marginal rate of substitution.
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diminishing
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Shows what amounts of these two resources can be bought for a given amount of money
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Isocost
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_________ is indifference curve, as _________ is to budget line.
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Isoquant, isocost
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