Chapter 8: Technology, Production, And Costs

Front 1

Average Fixed Costs

Back 1

Fixed costs divided by the quantity of output produced.

Front 2

Average Product of Labor

Back 2

The total output produced by a firm divided by the quantity of workers.

Front 3

Average Total Costs

Back 3

Total cost divided by the quantity of output produced.

Front 4

Average Variable Cost

Back 4

Variable cost divided by the quantity of output produced.

Front 5

Constant returns to scale

Back 5

The situation in which firm's long-run average costs remain unchanged as it increases output.

Front 6

Diseconomies of Scale

Back 6

The situation in which a firm's long-run average costs rise as the firm increases output.

Front 7

Economies of Scale

Back 7

The situation when a firm's long-run average costs fall as it increases the quantity of output it produces.

Front 8

Explicit Cost

Back 8

A cost that involves spending money.

Front 9

Fixed Costs

Back 9

Costs that remain constant as output changes.

Front 10

Implicit Cost

Back 10

A nonmonetary opportunity cost.

Front 11

Implicit Cost

Back 11

A nonmonetary opportunity cost.

Front 12

Law of Diminishing Returns

Back 12

The principle that, at some point, adding more of a variable input, such as labor, to the same amount of fixed input, such as capital, will cause the marginal product of the variable input to decline.

Front 13

Long Run

Back 13

The period of time in which a firm can vary all its inputs, adopt new technology, and increase or decrease the size of its physical plant.

Front 14

Long Run

Back 14

The period of time in which a firm can vary all its inputs, adopt new technology, and increase or decrease the size of its physical plant.

Front 15

Long-Run Average Cost Curve

Back 15

A curve that shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed.

Front 16

Marginal Cost

Back 16

The additional benefit to a consumer from consuming one more unit of a good or service.

Front 17

Marginal Cost

Back 17

The additional benefit to a consumer from consuming one more unit of a good or service.

Front 18

Marginal Product of Labor

Back 18

The additional output a firm produces as a result of hiring one more worker.

Front 19

Minimum Efficient Scale

Back 19

The level of output at which all economies of scale are exhausted.

Front 20

Opportunity Cost

Back 20

The highest-valued alternative that must be given up to engage in an activity.

Front 21

Production Function

Back 21

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs.

Front 22

Short Run

Back 22

The period of time during which at least one of a firm's inputs is fixed.

Front 23

Technological Change

Back 23

A change in the ability of a firm to produce a given level of output with a given quantity of inputs.

Front 24

Technology

Back 24

The processes a firm uses to turn inputs into outputs of goods and services.

Front 25

Technology

Back 25

The processes a firm uses to turn inputs into outputs of goods and services.

Front 26

Total Cost

Back 26

The cost of all the inputs a firm uses in production.

Front 27

Technology

Back 27

The processes a firm uses to turn inputs into outputs of goods and services.

Front 28

Total Cost

Back 28

The cost of all the inputs a firm uses in production.

Front 29

Variable Costs

Back 29

Costs that change as output changes.