Robert H. Frank,
Cornell University
Ian C. Parker,
University of Toronto
| Average product | Total output divided by the quantity of the variable input.
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| Constant returns to scale | The property of a production process whereby a proportional increase in every input yields an equal proportional increase in output.
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| Decreasing returns to scale | The property of a production process whereby a proportional increase in every input yields a less than proportional increase in output.
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| Increasing returns to scale | The property of a production process whereby a proportional increase in every input yields a more than proportional increase in output.
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| Intermediate products | Products that are transformed by a production process into products of greater value.
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| Isoquant | The set of all technically efficient input combinations that yield a given level of output.
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| Long run | The shortest period of time required to alter the amounts of all inputs used in a production process.
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| Marginal product | Change in total product due to a 1-unit change in the variable input.
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| Marginal rate of technical substitution (MRTS) | The rate at which one input can be exchanged for another without altering the total level of output.
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| Production function | The relationship that describes how inputs like capital and labour are transformed into outputs.
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| Short run | The longest period of time during which at least one of the inputs used in a production process cannot be varied.
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| Total product curve | A curve showing the amount of output as a function of the amount of variable input.
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2002 McGraw-Hill Higher Education