Money and Diminishing Marginal Returns Flashcards
(8 cards)
1
Q
What act as the medium of exchange
A
MONEY
2
Q
Why does money exist?
A
To combat the barter of exchange (swapping goods)
3
Q
List me two types of resources
A
- Fixed Resources
- Variable Resources
4
Q
What is Fixed Resources?
A
Resources that don’t change with output (e.g rent)
5
Q
What is variable Resources?
A
Resouces that change with output (e.g electricity)
6
Q
What is Short Run?
A
Where at least one factor of production is fixed
7
Q
What is long run?
A
Where all factors of production are available
8
Q
What is Diminishing Marginal Returns?
A
Diminishing marginal returns: occurs when adding an additional factor of production results in smaller increases in output
