Economics The Production Function

Questions and Answers

What is a production function?

A report on firm profitability.

A graph showing how a change in the amount of a single variable input changes total output. (correct)

A method to measure total sales in the market.

A technique to analyze consumer preferences.

What is the short run in production?

A production period so short that only the variable inputs can be changed.

What defines the long run in production?

Production period long enough to change the amounts of all inputs.

What does total product refer to?

Total output or production by a firm. Signup and view all the answers

What is marginal production?

Extra output due to the addition of one more unit of input. Signup and view all the answers

What are the stages of production?

Phases of production that consist of increasing, decreasing, and negative marginal returns. Signup and view all the answers

What does diminishing returns mean?

Stage where output decreases in rate as more units of variable input are added. Signup and view all the answers

Study Notes

Production Function

Illustrates the relationship between a variable input and total output.
Displays how changes in a single variable input impact overall production levels.

Short Run

Defined as a production period where only variable inputs can be adjusted.
Fixed inputs remain unchanged during this period.

Long Run

A prolonged production period allowing adjustments in all input amounts.
All factors of production can be varied, differing from the short run.

Total Product

Represents the total output generated by a firm.
Indicates the overall production quantity achieved.

Marginal Production

Refers to the additional output obtained by employing one more unit of input.
Important metric to evaluate the efficiency of resource allocation in production.

Stages of Production

Consists of three phases: increasing, decreasing, and negative marginal returns.
Each stage reflects different efficiency levels as inputs are varied.

Diminishing Returns

Occurs when increasing the variable input leads to a slowdown in output growth.
Highlights inefficiencies when excessive units of variable input are used.

Description

Test your knowledge of the production function in economics with these flashcards. Learn about key concepts such as short run, long run, and total product. Perfect for students looking to deepen their understanding of production theories.