micro exam 2

micro exam 2 - CHAPTER 6 Inputs-resources, such as labor,...

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CHAPTER 6 Inputs-resources, such as labor, capital equipment, and raw materials, that are combined to produce finished goods Factors of production- (a.k.a. inputs) resources that are used to produce a good Output-the amount of a good or service produced by a firm Production function-a mathematical representation that shows the maximum quantity of output a firm can produce given the quantities of inputs that it might employ ~technological progress shifts the function Production set-the set of technically feasible combinations of inputs and outputs ~points on or below function Technically inefficient-the set of points in the production set at which the firm is getting less output from its labor than it could ~below function Technically efficient-the set of points in the production set at which the firm is producing as much output as it possibly can given the amount of labor it employs ~on the boundary of the production set Labor requirements function-a function that indicates the minimum amount of labor required to produce a given amount of output Total production function-(single-input production function) a production function. A total product function with a single input shows how total output depends on the level of output Increasing marginal returns to labor-the region along the total production function where output rises with additional labor at an increasing rate ~convex ~occurs b/c of labor specialization=more productive more workers Diminishing marginal returns to labor-the region along the total product function in which output rises with additional labor but at a decreasing rate ~concave ~occurs when firms exhausts ability to increase productivity through specialization Diminishing total returns to labor-the region along the total product function where output decreases with additional labor ~too many workers little space to be coordinate Average product of labor-the average amount of output per unit of labor Marginal product of labor-the rate at which total output changes as the quantity of labor the firm uses is changed
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micro exam 2 - CHAPTER 6 Inputs-resources, such as labor,...

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