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  • Created on: 08-04-14 16:31
Increasing Marginal Returns - SR Production
1 Fixed factor of production e.g size of premises, firm increases production which then increases workers, leads to an increase in total output. Thus, increasing marginal returns occur.
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Diminishing Returns
When a firm cannot accommodate the extra workers, therefore output is reduced meaning diminishing marginal returns occur.
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Fixed Costs
These DO NOT VARY with output, even if the firm doesn't produce, these costs are still required. E.g rent and salaries
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Variable Costs
These DO VARY with output, increase in production = increase in variable costs
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Semi-variable Costs
These are both fixed and variable, e.g landline usage
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Other cards in this set

Card 2

Front

When a firm cannot accommodate the extra workers, therefore output is reduced meaning diminishing marginal returns occur.

Back

Diminishing Returns

Card 3

Front

These DO NOT VARY with output, even if the firm doesn't produce, these costs are still required. E.g rent and salaries

Back

Preview of the back of card 3

Card 4

Front

These DO VARY with output, increase in production = increase in variable costs

Back

Preview of the back of card 4

Card 5

Front

These are both fixed and variable, e.g landline usage

Back

Preview of the back of card 5

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