The increase in output is more than proportional i.e. more than doubles
4 of 21
Constant RTS
Increase in output is proportional
5 of 21
Decreasing RTS
Increase in output less than proportional
6 of 21
EOS
An increase in output leads to a reduction in average total costs for firms
7 of 21
Average Revenue
TR/ output
8 of 21
Marginal Revenue
amount received from selling one extra unit of output
9 of 21
Normal Profit
Min amount needed to keep a firm in current line of production
10 of 21
Abnormal Profit
Made over an above normal profit
11 of 21
Internal EOS
Long term growth of the firm
12 of 21
External EOS
Occur within an industry not a firm, benefits most firms
13 of 21
Invention
Creating a new product or process
14 of 21
Innovation
Improving existing inventions into marketable products
15 of 21
Productive efficiency
Centres on minimising average costs of production
16 of 21
Dynamic efficiency
Occurs in the long run, whereby productive efficiency increases over time
17 of 21
Creative destruction
Capitalism leads to a constantly changing structure of the economy, industrial transformation from competitive to monopolist market and back again etc.
18 of 21
Marginal cost of Labour
Extra cost of hiring one extra worker
19 of 21
Marginal Physical Product
Extra output produced by one extra worker
20 of 21
Marginal Revenue Product of Labour
Change in total revenue from selling extra output produced by extra worker employed
21 of 21
Other cards in this set
Card 2
Front
All factors of production are variable
Back
Long term
Card 3
Front
One extra
Back
Card 4
Front
The increase in output is more than proportional i.e. more than doubles
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