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16 Cards in this Set

  • Front
  • Back
total physical product (TTP)
the maximum output that can be produced when successive units of a variable resource are added to fixed amounts of other resources
law of diminishing marginal returns
when successive equal amounts of a variable resource are combined with a fiexed amount of another resource, marginal increases in output that can be attributed to each additional unit of the variable resource will eventually decline
average physical product (APP)
output per unit of resource
marginal physical product (MPP)
the additional quantity that is produced when one additional unit of a resource is used in combination with the same quantities of all other resources
average total cost (ATC)
per unit cost; total cost divided by the total output
marginal cost (MC)
the additional cost of producing one more unit of output
total fixed costs (TFC)
costs that must be paid whether a firm produces or not
total variable costs (TVC)
costs that rise or fall as production rises or falls
total costs (TC)
the sum of total variable and total fixed costs
short-run average total cost (SRATC)
the total cost of production divided by the total quantity of output produced when at least one resource is fixed
size; all resources change when scale changes
long-run average total cost (LRATC)
the lowest-cost combination of resources with which each level of output is produced when all resources are variable
economies of scale
the decrease in per unit costs as the quantity of production increases and all resources are variable
diseconomies of scale
the increase in per unit costs as the quntity of production increases and all resources are variable
constant returns to scale
unit costs remain constant as the quantity of production is increases and all resource are variable
minimun efficient scale (MES)
the minimum point ot the long-run average-cost curve; the output level at which the cost per unit of output is the lowest