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22 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Business |
An enterprise that brings individuals, financial resources, and economic resources together to produce a good or service for economic gain |
Factors of production |
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Production |
The process of transforming a set of resources into a good or service that has economic value |
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Inputs |
The resources used in production |
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Output |
The quantity of a good or service that results from production |
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Labour-intensive process |
A production process that employs more labour and less capital |
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Capital-intensive process |
A production process that employs more capital and less labour |
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Productive efficiency |
Making a given quantity of output at the lowest cost |
Think smart and easy not hard and dumb |
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Explicit costs |
Payments made by a business to businesses or people outside of it |
Also referred to as accounting costs since they include all costs |
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Implicit costs |
The owners opportunity costs of being involved with a business |
Relate to the resources provided by the owners |
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Normal profit |
The minimum return necessary for owners to keep funds and their entrepreneurial skills in their business |
Highest possible return |
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Economic costs |
A business's total explicit and implicit costs |
Ec+Ic |
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Accounting profit |
The excess of a business's total revenue over its explicit costs |
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Economic profit |
The excess of a business's total revenue over its economic costs |
TR-Ec |
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Fixed inputs |
Inputs whose quantities cannot be adjusted in the short run |
The land available for cultivation cannot be varied in the _______ run |
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Variable inputs |
Inputs whose quantities can be adjusted in the short run |
Includes labour and materials |
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Total product |
The overall quantity of output produced with a given workforce |
1 worker=80 tshirts per day |
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Average product |
The quantity of output produced per worker |
Q÷L |
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Marginal product |
The extra output produced by an additional qorker |
The difference between one worker production and two workers production |
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Law of diminishing marginal returns |
At some point, as more units of a variable input are added to a fixed input, the marginal product will start to decrease |
The more workers, the less output there will be of a product |
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Fixed costs |
Economic costs for inputs that remain fixed at all quantities of output |
Related to machinery and land |
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Variable costs |
Economic costs for inputs that vary at each quantity of output |
Wages, payments for materials used |
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Total cost |
The sum of all fixed and variable costs at each quantity of output |
FC+VC |
