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### 27 Cards in this Set

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 average product Total product divided by units of input employed constant returns to scale When a given percentage increase in all inputs leads to an identical percentage increase in output continuous production function Production function where inputs can be varied in an unbroken marginal fashion decreasing returns to scale When output increases at a rate less than the proportionate increase in inputs discrete production function Production function with distinct input patterns economic efficiency Achieved when all firms equate input marginal revenue product and marginal cost (maximize profits) expansion path Optimal input combinations as the scale of production expands increasing returns to scale When the proportional increase in output is larger than an under-lying proportional increase in input input substitution Systematic replacement of productive factors isocost curve (or budget line) Line of constant costs isoquant Different input combinations used to efficiently produce a specified output labor productivity Output per worker hour law of diminishing returns As the quantity of a variable input increases, the resulting rate of output increase eventually diminishes marginal product Change in output associated with a 1-unit change in a single input marginal rate of technical substitution (MRTS) Amount of one input that must be substituted for another to maintain constant output marginal revenue product Amount of revenue generated by employing the last input unit multifactor productivity Output relative to the combined inputs of labor, capital, and intermediate purchases net marginal revenue Marginal revenue after all variable costs output elasticity Percentage change in output associated with a 1 percent change in all inputs power production function Multiplicative relation between input and output production function Maximum output that can be produced for a given amount of input productivity growth Rate of increase in output per unit of input returns to a factor Relation between output and variation in only one input returns to scale Output effect of a proportional increase in all inputs ridge lines Graphic bounds for positive marginal products technical efficiency Least-cost production of a target level of output total product Whole output from a production system