# Chapter 7

 The flashcards below were created by user Mingming on FreezingBlue Flashcards. What are the factors of production? LandLaborCapitalEntrepreneurship It is the transformation of inputs to outputs Poduction These are the factors of production Input It is the result that has been created by the inputs Output 2 types of output GoodsServices It is the process by which inputs are turned into outputs Technology of a firm Classification of the factors of production Fixed FactorVariable Factor Remains constant regardless the volume of production Fixed factor Changes in accordance with the volume of production Variable factor Two aspects of production Decision The ability to produceThe willingness to produce prescribed by the resources availability and state of technology The ability to produce Prescribed by profit incentives The willingness to produce It is the relationship between quantities of various inputs used an the maximum output that can be produced with those inputs Production Function quantities of one or more production factors cannot be changed Short run The use of at least one factor of production cannot be changed Short-run All factors can be changed Long-run the total amount of medical ervices or goods produced Total Product Output per unit of particular product Average product extra product or output added by 1 extra unit of that input while other inputs are held constant Marginal product The average product increases as the labor increases MP > AP The average product is constant MP = AP The average product will fall as labor input increases MP < AP By holding one of the inputs constant except for one and continually increasing the other input, a point will be arrived at certain point wherein the rate in the increase of output will fall Law of Diminishing Marginal Returns output will decrease even if there is an increase in one of the inputs Law of Diminishing Marginal Returns The three stages of production Stage IStage IIStage III Production starts at the origin until the highest portion of the average product Stage I Highest portion of average product until marginal product is zero State II Begins where the marginal product is zero until its negative range Stage III a process of determining the output by employing the two variables such as capital and labor Production with two variable inputs a curve which shows all the possible combinations of inputs that yield the same level of output Isoquant Characteristics of isoquants Isoquants further from the origin represent greater output levelsIsoquants do not intersectIsoquants are usually convex to the originIsoquants are negatively sloped a producer is willing to give up less and less capital to gain additional amount of labor and still lie on the same isoquant Marginal rate of technical substitution a straight line showing the different combinations of capital and labor that a firm can purchase or hire given his total outlay and the factor prices Isocost a series of isocost lines Isocost map Relates the change in output to a proportionate change in the amount f input used Return to scale if doubling all inputs causes output to increase more than double Increasing return to scale if doubling all inputs causes doubling of output Constant return to scale if doubling all inputs result to less that double output Deecreasing return of scale AuthorMingming ID281384 Card SetChapter 7 DescriptionProduction Concept in Health Care Updated2014-08-26T22:09:03Z Show Answers