1. Chapter 5 Section 2 The Theory Of Production

2. Production Functions Figure that shows how total output changes based on the change of a single variable input (EX… labor) while all other inputs are held constant

3. Production Periods Short Run and Long Run Short Run Time so brief that only the amount of variable input can change Long Run Period long enough for a firm to change all productive resources

4. Total Product vs. Marginal Product Total Product is the total output produced by a firm Marginal Product Change in total output by adding one more unit of a variable input This varies from input, can sometimes be negative

5. Stages of Production Stages of Production happens in 3 stages I. Increasing Marginal Returns Marginal Product increases with the addition of a worker II. Decreasing Marginal Returns Output increases at a diminishing rate of return III. Negative Marginal Returns Output falls, too many peeps!