Please enable JavaScript.
Coggle requires JavaScript to display documents.
PRODUCTION THEORY (DEFINITION (achieved, consumer, goods and services,…
PRODUCTION THEORY
DEFINITION
achieved
consumer
goods and services
demand
produce
maximize
group of people
profit
EXPLICIT COST
cash outlay
example : student fees
require
IMPLICIT COST
cash outlay
opportunity cost
do not
example : owner's time
PROFIT
received
sell
firm
output
amount of money
revenue - cost = profit
PRODUCTION FUNCTION
quantity
input
relationship
output
MARGINAL PRODUCT
input
additional
output
arising
increase
(∆ Q) / (∆ L)
DIMINISHING MARGINAL PRODUCT
quantity
increase
decline
input
FIXED AND VARIABLE COST
Fixed Cost (FC)
unchange
quantity
cost
Variable Cost (VC)
increase
decrease
firm
bare
cost
TOTAL COST (TC)
TC = FC + VC
ECONOMIC PROFIT
including
minus
explicit cost
total cost
implicit cost
total revenue
ACCOUNTING PROFIT
minus
total explicit cost
total revenue
SHORT RUN
fixed
fixed cost
inputs
factors of production
LONG RUN
inputs
variable
ATC CHANGE AS SCALE PRODUCTION CHANGE
constant returns to scale
diseconomies of scale
economies of scale