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RELATIVE POVERTY LEVEL: The amount of income a person or family needs to purchase a relative amount of basic necessities of life. These basic necessities are identified relative to the current structure of society and the economy. For example, while a refrigerator would be a basic necessity for someone living in the our modern U.S. economy, it probably would not be consider a necessity for nomads of sub-Saharan Africa or aborigines of Australia.
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Lesson 14: Production | Unit 4: Long-Run Production
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Page: 18 of 25
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Topic:
Returns To Scale
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- The key principle guiding long-run production is returns to scale.
- Returns to scale are the changes in production that results when all resources are change proportionally in the long run.
- Firms typically operate in one of three returns to scale alternatives:
- Increasing returns to scale
- Decreasing returns to scale
- Constant returns to scale
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PERFECT COMPETITION, SHUTDOWN A perfectly competitive firm is presumed to shutdown production and produce no output in the short run, if price is less than average variable cost. This is one of three short-run production alternatives facing a firm. The other two are profit maximization (if price exceeds average total cost) and loss minimization (if price is greater than average variable cost but less than average total cost).
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The penny is the only coin minted by the U.S. government in which the "face" on the head looks to the right. All others face left.
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"You miss 100% of the shots you never take. " -- Wayne Gretzky, hockey player
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VES
Variable Elasticity of Substitution
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