Free Online Flashcard Deck

3 Production and Cost Free Online FlashCards

Study 3 Production and Cost with 12 free online flashcards. Review key terms, definitions, and concepts with this interactive flashcard deck.

12 cards

Front

What does a production function show?

Back

A production function shows how quantities of inputs determine output.

Front

What defines the short run in production?

Back

At least one input is fixed, while variable inputs can be adjusted.

Front

What is fixed cost?

Back

Fixed cost does not change with output in the short run and is incurred even when output is zero.

Front

What is variable cost?

Back

Variable cost changes with output because it pays for variable inputs, such as hourly labor or materials.

Front

How is total cost calculated?

Back

Total cost is the sum of fixed cost and variable cost: $TC = FC + VC$ .

Front

How is average fixed cost calculated?

Back

Average fixed cost is fixed cost per unit of output: $AFC = \frac{FC}{Q}$ .

Front

How is average variable cost calculated?

Back

Average variable cost is variable cost per unit of output: $AVC = \frac{VC}{Q}$ .

Front

What is average total cost?

Back

Average total cost is total cost per unit and equals average fixed cost plus average variable cost: $ATC = \frac{TC}{Q} = AFC + AVC$ .

Front

What does marginal cost measure?

Back

Marginal cost is the additional cost per additional unit of output: $MC = \frac{\Delta TC}{\Delta Q}$ .

Front

What is the marginal product of labor?

Back

Marginal product is the extra output from one more unit of an input: $MP = \frac{\Delta Q}{\Delta L}$ .

Front

How does labor's marginal product relate to marginal cost?

Back

When labor is the only variable input and its price $w$ is constant, $MC = \frac{w}{MP}$ .

Front

What does the slope of a total-cost curve represent?

Back

The slope of a total-cost curve between two output levels is marginal cost.

3 Production and Cost Free Online FlashCards

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