Production Theory Flashcards
(42 cards)
Goods and services cannot be produced without utilizing the _____ of ____ such as ____, ____, _____ and_______.
the factors of production
land, labor, capital, and entrepreneurship
It is the fundamental decision of the firm to determine the _____ of _____ and _______ to produce and how much _____ of ______ to apply together with other inputs to generate an output with the ______ ____ of ______.
amount of goods and services
factors of production
highest level of efficiency
The transformation of inputs into outputs
Production
Two types of output
Goods and Services
Different levels of inputs can produce?
different levels of outputs
The ____ of a ____ is the process by which inputs are turned into outputs.
the technology of a firm
The technological relationship between quantity of physical inputs and the quantity of goods produced.
Production Function
Production Function is central concept in ____ ______theories as it is used to define ______ _____and distinguish between _____ and _____ ______ which is a primary focus of economics.
mainstream neoclassical
marginal product
allocative and distributive efficiency
used to model the case of numerous outputs and numerous inputs. These functions are generalizations of the simple production function in economics.
shepherds distance functions or alternatively directional distance functions
like demand, production functions have a _____ duration
finite
It depicts the flow of inputs that result to flow of output over time
Production Function
A firm’s production function is determined by the ____ of _____
state of technology
With each advancement in technology, the firm’s _____ ______ changes
production function
the total amount of a commodity that is produced with a given level of factor inputs and technology in a given period of time.
Total Product
the total product per unit of variable input
Average Product
addition in total output per unit change in variable input
Marginal Product
TPL =
ΣMP = AP x L
APL =
TP/L = Q/L
MPL =
Change in TP or Q/ Change In L
As MP increases, what happens to TP?
TP increases at an increasing rate
When MP falls but is positive, what happens to TP?
TP increases at a diminishing rate
MP = 0, what happens to TP?
TP reaches maximum
When MP is negative, what happens to TP?
TP decreases
When MP > AP, what happens to AP?
AP increases
