Factors of Production Quiz

The resources used to produce goods and services. These include land, labor, capital, and entrepreneurship.

A relationship showing how much output a firm can produce given various levels of inputs (e.g., labor, capital).

The level of output where the firm uses the fewest resources possible to produce a given amount of goods or services.

A graphical representation of the maximum possible combinations of two goods or services that can be produced with available resources.

The point at which adding more of one input (e.g., labor) to fixed inputs (e.g., factory space) results in smaller increases in output.

The change in total output resulting from a one-unit increase in a particular input, holding other inputs constant.

Beyond a certain point, adding more of one input to fixed inputs will lead to a decrease in the marginal product of that input.

A resource, such as labor, land, or capital, that is used to create goods or services.

The change in total cost from producing one additional unit of output.

The sum of fixed costs and variable costs at any rate of output.

Costs that do not change with the level of output.

Costs that change with the level of output.

A point where adding more of a variable input (like workers) results in smaller increases in output.

Total cost divided by the quantity produced.

Variable cost divided by the quantity produced.

Costs that remain constant regardless of the level of output. These costs are incurred even if no output is produced.

Total fixed cost divided by the number of units produced. It represents the fixed cost per unit of output.

Costs that change directly with the level of output. These costs increase as production increases.

A graph that shows the relationship between the total cost of production and the level of output.

The value of resources used in production but for which no monetary payment is made.

The sum of explicit and implicit costs. Represents the total cost of using resources in production, including the opportunity cost.

Reductions in the average total cost of production that occur when a firm increases its scale of operations. This happens because fixed costs are spread over a larger volume of output.

Increases in the average total cost of production that occur when a firm increases its scale of operations beyond a certain point. This happens because of factors like managerial inefficiencies, increased coordination difficulties, and communication breakdowns.

The additional output produced by using one more unit of a variable input (e.g., labor), holding other inputs constant.

The total fixed cost divided by the quantity of output produced.

The total variable cost divided by the quantity of output produced.

The point on the average variable cost curve where the cost per unit is the lowest.

The cost per unit of output in the short run, considering both fixed and variable costs. It is calculated by dividing total cost by the quantity produced.

A decision made by a firm regarding the size and scale of its operations, considering all factors of production as variable. This involves choosing the optimal plant size and technology for long-term production.

An expense that changes with the level of output. It increases as production increases and decreases as production decreases.

A measure of the efficiency of production. It is calculated by dividing total output by the total inputs used.

An improvement in the efficiency of labor, resulting in higher output per worker. This can be achieved through factors like improved training, technological advancements, or better management practices.