Vocabulary
A Variable Input is
What can be changed in the short run of production
Average Variable Cost
What is the variable cost divided by the Quantity
Plant Capacity
What is a firms maximum potential level of production
When Marginal cost rises
What is diminishing returns
LRATC
What is the Long Run Average Total Cost Curve
A Fixed Input is
What cannot be changed in short run in production
Average Total Cost
What is the total cost divided by the quantity
Example of a Variable Input
What is labor, materials, ingredients
When Marginal cost decreases
What is specialization
Economies of scale
What is long run ATC decreases as output increases
Production Function
What is output produced by combination of inputs. Q=f(K,L)
Average Fixed Cost
What is the fixed cost divided by the quantity
Example of Fixed Input
What is tools, machines, factories
Total Cost
What is the sum of fixed and variable costs
Diseconomies of scale
What is long run ATC increases as output increases
Negative Returns
Output is decreasing with each additional input
Average Product
What is Total Product divided by Labor
Marginal Product represents
What is the slope of total production line
Variable Cost
What is a cost that changes with the output
Constant returns to Scale
What is long run ATC is constant as output increases
Diminishing Returns
What is increasing output at a decreasing rate
Marginal Product
What is change in Total Product divided by change in Labor
Where Marginal Product intersects
Fixed Cost
What is a cost that must be paid even when the output is zero
LRATC is made up of the multiple these
What is SRATCs