# Econ 3: Chapter:1 Definitions:

Flashcards For

Econ 3:

Chapter 1:

Theory Of the Firm: Objectives,Cost and Revenue

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Fixed Factor Inputs
Those factors inputs that DO NOT change as output is increased or decreased. E.G. Office and Capital equipment in Short Run
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Variable Factor Inputs
Those factor inputs that DO change with output. More of them are employed as production is increased and vice versa. E.G. Labour and Raw Materials
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Short-Run
Period of time in which AT LEAST ONE factor input is fixed. The firm can increase output by adding more variable factor inputs to the fixed factor inputs
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Long-Run
Period of time in which NO factor of production is fixed and can therefore can increase or decrease its scale of production by increasing or decreasing fixed factor inputs like Plants and Machines
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Total Product (TP)
The quantity of output,measured in physical units,produdeced by a given no of inputs over a period of time. It is a measure of PRODUCTION
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Average Product (AP)
The quantity of output per unit of variable inputs. It is the TP divided by the No of Units of the variable factors of production employed (E.G. Output per worker). It is a measure of PRODUCTIVITY
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Marginal Product (MP)
The change in TP when an additional unit of the variable factor of production is employed. For example marginal product of labour would measure the change in output that comes from increasing the employment of labour by one person. It is a measure of
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## Other cards in this set

### Card 2

#### Front

Those factor inputs that DO change with output. More of them are employed as production is increased and vice versa. E.G. Labour and Raw Materials

#### Back

Variable Factor Inputs

### Card 3

#### Front

Period of time in which AT LEAST ONE factor input is fixed. The firm can increase output by adding more variable factor inputs to the fixed factor inputs

### Card 4

#### Front

Period of time in which NO factor of production is fixed and can therefore can increase or decrease its scale of production by increasing or decreasing fixed factor inputs like Plants and Machines

### Card 5

#### Front

The quantity of output,measured in physical units,produdeced by a given no of inputs over a period of time. It is a measure of PRODUCTION