Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
19 Cards in this Set
- Front
- Back
|
long run production decision determinants |
firms look at all available production technologies and choose most economically efficient |
|
|
technical efficiency |
few inputs as possible are used to produce a given out put |
|
|
economical efficiency |
method that produces a given level of output at the lowest possible cost |
|
|
shape of the long run cost curve is |
due to the existence of economies and diseconomies of scale |
|
|
economies of scale |
when long run ATC decreases as output increases |
|
|
indivisible set up cost |
cost of an indivisible input for which a certain minimum amount of production must be undertaken before the input becomes economically feasible to use creates many real world economies of scale |
|
|
influences shape of the long run cost curve? |
all inputs are variable, so, only economies of scale average cost initially fall |
|
|
diseconomies of scale |
when long run ATC increases as output increases |
|
|
diseconomies of scale refer to |
the decrease in productivity that occur when there are equal percentage increases of all inputs |
|
|
constant returns to scale |
long run ATC do not change with an increase in output |
|
|
constant returns to scale shown.. |
by flat portion of the ATC curve |
|
|
economies of scale are important because |
reason why firms attempt to expand markets |
|
|
diseconomies of scale are important because |
prevent a firm from expanding |
|
|
envelope relationship |
at the planned output level, short-run ATC=long run ATC but all other levels of output, short run average total cost is higher than long-run ATC |
|
|
each short run total cost curve.. |
touches the long run average total cost curve at only one point |
|
|
economies of scope |
when the costs of producing products are interdependent so that it's less costly for a firm to produce one good when it's already producing another |
|
|
learning by doing |
as we do something, we learn what works and what doesn't and over time we become proficient |
|
|
technological change |
increase in the range of production techniques that leads to more efficient ways of producing goods as well as the production of new and better goods |
|
|
technological change alters |
the nature of production costs |
