Definition
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Answer
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The time period in which it is only possible to change the level of input of variable factors of production.
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Short Run
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The time period in which it is possible to change the level of input of all of the factors of production.
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Long Run
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The quantity of output produced by a given quantity of inputs over a period of time.
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Total Returns
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The quantity of output produced per unit of input.
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Average Returns
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The additional quantity of output produced by one extra unit of input.
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Marginal Returns
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The proportionate change in output of a firm or industry resulting from a proportionate increase in all inputs.
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Returns to Scale
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Occurs if the percentage increase in output is greater than the percentage increase in input.
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Increasing Returns to Scale
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Occurs if the percentage increase in output is equal to the percentage increase in input.
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Constant Returns to Scale
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Occurs if the percentage change in output is less than the percentage increase in input.
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Decreasing Returns to Scale
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The sum of fixed costs and variable costs.
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Total Costs
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The total costs divided by the number of units produced.
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Average Costs
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The addition to total costs arising from making one more item.
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Marginal Costs
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The lowest level of output at which long-run average cost is minimised.
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Minimum Efficient Scale
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The total money received from the sale of a firm's goods and services. It can also refer to the total money received from the sale of a particular good or service.
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Total Revenue
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The average receipt of money for each good or service that is sold.
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Average Revenue
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The addition to total revenue as a result of the sale of one more unit of output.
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Marginal Revenue
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The difference between the total revenue of a firm and its total costs.
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Profit
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Making the highest possible level of profit.
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Profit Maximisation
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The minimum level of profit needed to keep a firm operating in its present market.
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Normal Profit
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Any profit over and above the level of normal profit.
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Abnormal Profit
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The creation of a new idea or product.
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Invention
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The successful exploitation of new ideas.
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Innovation
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Describes the process of adapting new applications of practical or mechanical sciences to industry and commerce.
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Technological Change
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An incessant process by which innovation and new technology constantly lead to the introduction of new production units that replace outdated ones.
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Creative Destruction
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