ECON Chapter 5 Notes.txt

  1. Define supply
    The ability and willingness to seel specific quantities of a good at alternative prices in a given time period.
  2. What is the factors of production?
    Resource inputs used to produce goods and service e.g. land, labor, capital, entrepreneurship.
  3. What is MPP?
    Marginal Physical product, the change in total output associated with one additional unit of input.
  4. What is the law of diminishing returns?
    The marginal physical product of a variable input declines as more of it is employed with a given quantity of other inputs.
  5. Define short run.
    The period in which the quantity of some inputs cannot be changed.
  6. What is the long run?
    A period of time long enough for all inputs to be varied (no fixed cost).
  7. What is profit?
    The difference between total revenue and total costs.
  8. What is the total cost?
    The market value of all resource used to produce a good or service.
  9. Define fixed costs.
    Costs of production that do not change when the rate of output is altered, e.g. the cost of basic plant and equipment.
  10. What are variable costs?
    Costs of production that change when the rate of output is altered e.g. labor and material costs.
  11. Define the average total cost (ATC)?
    Total cost divided by the quantity produced in a given time period.
  12. The marginal cost (MC) is what?
    The increase in total cost associated with a one-unit increase in production.
  13. The production decision si what?
    The selection of the short-run rate of output (with existing plant and equipment).
  14. What is the investment decision?
    The decision to build buy or lease plant and equipment: to enter or exit and industry.
  15. What is the economic cost?
    The value of all resources used to produce a good or service: opportunity cost.
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ECON Chapter 5 Notes.txt
econ 1101 chapter 5