Questions and Answers
What is the production function?
What is a fixed input?
An input whose quantity is fixed for a period of time and cannot be varied.
What is a variable input?
An input whose quantity the firm can vary at any time.
Define the long run in production.
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What does the term short run mean?
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What does the total product curve represent?
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What is the marginal product?
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What is the Marginal Product of Labour (MPL)?
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Define fixed cost.
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What is variable cost?
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What is total cost?
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The relationship among fixed cost, variable cost, and total cost can be represented as _____
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What does the total cost curve show?
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Study Notes
Production Function
- Describes the link between input quantities and output produced by a firm.
Inputs
- Fixed Input: Remains constant over a specific time frame; cannot be altered.
- Variable Input: Can be adjusted at any time depending on production needs.
Time Periods
- Long Run: All inputs can be modified; no fixed constraints.
- Short Run: At least one input remains fixed; decisions on variable inputs are made.
Total Product Curve
- Illustrates how output quantity varies with the amount of variable input, holding fixed input constant.
Marginal Product
- Refers to the extra output generated by an additional unit of input.
- Marginal Product of Labour (MPL): Expressed as MPL = ΔQ/ΔL, representing the change in output per change in labour input.
Costs in Production
- Fixed Cost: Constant regardless of output quantity; associated with fixed inputs.
- Variable Cost: Fluctuates with output levels; linked to variable inputs.
- Total Cost: Combined cost of fixed and variable expenses for producing a specific output level.
Cost Relationship
- Total Cost = Fixed Cost + Variable Cost (TC = FC + VC).
Total Cost Curve
- Depicts the connection between overall costs and quantity of output generated.
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Description
Test your understanding of the production function, including the distinctions between fixed and variable inputs. This quiz explores important concepts such as total product curves, marginal product, and costs related to production. Challenge yourself to grasp the dynamics of these key economic principles!
