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10 Cards in this Set
- Front
- Back
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Theory of Production
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The relationship between the factors of production and the output of goods and services.
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Short Run
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A period of Production that allows producers to change only the amout of the variable input called labor.
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Long Run
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A period of production long enough for producers to adjust the quantities of their resources, including capital.
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Law of Variable Proportions
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States that in the short run output will change as one input varies while the others are held constant.
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Raw Materials
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Unprocessed natural resources used in production.
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Total Product
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Total output produced by the firm.
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Marginal Product
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The extra output or change in total product caused by the addition of one more unit of variable input.
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State of Production
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Increasing returns, diminishing returns, and negative returns that are based on the way marginal product changes as the variable input of labor is changed.
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Production Function
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A concept that describes the realationship between changes in output to different amounts of a single input while other inputs are held constant.
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Diminishing Returns
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The stage where output increases at a diminishing rate as more units of variable input are added.
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