Flashcards
Law of Diminishing Returns
Flashcards do conjunto (10)
- 1Law of Dinminisging ReturnsAs successive units of a variable factor are added to given amount of fixed factor, there will come a point when each additional unit of the variable factor will produce less extra output than the previous unit and the TP will increase at a decreasing rate and MP will start to fall.
- 2When MP>APAP is rising
- 3When MPAP is falling
- 4When MP=APAP reaches to its max
- 5Short runPeriod of time in which at least one factor of production is fixed
- 6Long runPeriod of time in which all factors of production are variable, but the state of technology is fixed
- 7TPTotal amount that a firm produces using all of its factor of production in a given period
- 8APTotal amount of output divided by the no. of units of variable factor employed.
TP/Q - 9MPRefer to the additional output that is produced when you employ 1 extra unit of the variable factor
ChangeTP/changeQ - 10—