 | Term | Definition |
| |
In short term, output can only be increase |
by applying extra variable factors of production |
| |
The firms optimum level of production is |
when total products is maximised and at this point marinal product is zero |
| |
if the firm moves beyond optimum level of production |
output will fall and the only way of increasing output is buying, purchasing extra fixed factors of production and moving into long run |
| |
Diminising returns will always occurs |
because fixed factors of production such as land, machinery or buildings will all have a maximum possible output |
| |
Cost minimised level |
is when marginal cost equals average total cost |
| |
The objective of all businesses |
is to maximise level of profit as the owners of businesses will wish to maximisedthe returns on their investment. |
| |
All firms will maximise profit if they |
produce at a point which marginal cost equals marginal revenue when marginal cost is rising |
