1 Fixed factor of production e.g size of premises, firm increases production which then increases workers, leads to an increase in total output. Thus, increasing marginal returns occur.
1 of 5
Diminishing Returns
When a firm cannot accommodate the extra workers, therefore output is reduced meaning diminishing marginal returns occur.
2 of 5
Fixed Costs
These DO NOT VARY with output, even if the firm doesn't produce, these costs are still required. E.g rent and salaries
3 of 5
Variable Costs
These DO VARY with output, increase in production = increase in variable costs
4 of 5
Semi-variable Costs
These are both fixed and variable, e.g landline usage
5 of 5
Other cards in this set
Card 2
Front
When a firm cannot accommodate the extra workers, therefore output is reduced meaning diminishing marginal returns occur.
Back
Diminishing Returns
Card 3
Front
These DO NOT VARY with output, even if the firm doesn't produce, these costs are still required. E.g rent and salaries
Back
Card 4
Front
These DO VARY with output, increase in production = increase in variable costs
Back
Card 5
Front
These are both fixed and variable, e.g landline usage
Comments
No comments have yet been made