Microeconomics - 2G03Chapter 6Production and Cost:One Variable Input
6.1 The Production Function
Defining the Production Function
Key Terms
input bundle
technically efficient
production function
fixed-proportions productionfunction
Leontief production functions
variable proportions productionfunctions
Cobb-Douglas Productionfunction
oppertunity cost
sunk costs
avoidable costs
fixed costs
variable costs
long-run cost minimization
total product function
marginal product
free-disposal assumption
diminishing marginal productassumption
average product
variable cost function
average variable cost
short-run marginal cost
fixed cost
average fixed cost
short-run total cost
short-run average cost
multi-plant firms
Summary
Define production functions
determine costs and oppertunity costs
long-run cost minimization
short-run cost minimization
productions functions
total production function
TP(z1)
Marginal product
MP(z1) = slope of TP(z1)
average product
AP(z1) = TP(z1)/(z1)
most important assumption to TP(z1)
assumption of diminishing marginal product
beyond quantity of input 1
the slope of TP(z1) begins to get flatter