# ch5

The flashcards below were created by user christiemcmanaman on FreezingBlue Flashcards.

1. average product
Total output divided by total units of the variable factor of production
2. capital
Any durable goods (buildings, machinery, tools) produced by other factors of production for use in a production process. Any durable inputs to the production process, such as tools, machinery, and buildings.
3. elastic supply
Supply is elastic if price elasticity of supply is greater than one.
4. Entrepreneur
A person who perceives an opportunity to make a profit and then takes the risks necessary to organize factors of production in order to realize that profit.
5. factor of production
The resources used to produce output; comprised of four categoriesland, labour, capital, or entrepreneurship.
6. fixed factor of production
An input whose quantity cannot be altered in the short run.
7. inelastic supply
Supply is inelastic if price elasticity of supply is less than one.
8. intermediate inputs
Any inputs that are used up in the production process.
9. Labour
• Physical or mental exertion by human beings to produce Output
• Land
• Any land or other natural resource used to produce output.
10. law of diminishing marginal returns
As equal increments of one input are added, there is a point beyond which the marginal product of that input will decrease, if technology and all other inputs are held constant
11. long run
A period of time of sufficient length that all the firms factors of production are variable.
12. marginal cost
The increase in total cost that results from carrying out one additional unit of an activity. The increase in total cost incurred by producing one more unit of output.
13. marginal product
The increase in total output caused by an increase of one unit in the variable factor of production, holding technology and all other inputs constant
14. marginal revenue
The increase in total revenue obtained by producing and selling one more unit of output
15. perfectly elastic supply curve
A supply curve whose elasticity with respect to price is infinite.
16. perfectly inelastic supply curve
A supply curve whose elasticity with respect to price is zero.
17. price elasticity of supply
• The change in quantity supplied arising from a 1 percent change in price.
• price taker
• A firm that has no influence over the price of the product it sells.
18. production function
A technological relationship between inputs and outputs.
19. Profit
The total revenue a firm receives from the sale of its product minus all costs, explicit and implicit, incurred in producing it.
20. profit-maximizing firm
A firm whose primary goal is to maximize the difference between its total revenues and total costs.
21. short run
A period of time sufficiently short that at least one of the firms factors of production cannot be varied.
22. short-run cost-minimizing quantity of output
The quantity of output at which a factory reaches minimum average total cost.
23. short-run shutdown point
A firms minimum average variable cost; if price drops below minimum average variable cost, the firm will minimize its losses by shutting down
24. variable cost
A cost that changes as the firm changes its output.
25. variable factor of production
An input whose quantity can be altered in the short run.
 Author: christiemcmanaman ID: 117522 Card Set: ch5 Updated: 2011-11-17 18:08:07 Tags: economics Folders: Description: ch5 key terms econ Show Answers: