QUICK REVISION OF IMPORTANT POINT OF MICRO ECONOMICS FOR COMPETITIVE EXAM

   QUICK REVISION OF IMPORTANT POINT OF MICRO ECONOMICS FOR COMPETITIVE EXAM

   MICRO ECONOMICS

1. THE PRODUCTION FUNCTION IS A PURELY TECHNICAL RELATION WHICH ESTABLISHES RELATION BETWEEN FACTOR INPUTS AND OUTPUTS
2. A METHOD OF PRODUCTION IS A COMBINATION OF FACTOR INPUTS REQUIRED FOR THE PRODUCTION OF ONE UNIT OF OUTPUT
3. SHORT RUN REFERS TO THE PERIOD OF TIME IN WHICH THE INPUTS OF ONE OR MORE PRODUCTIVE AGENT IS FIXED
4. FIXED INPUT OS DEFINED AS ONE WHOSE QUANTITY CAN NOT BE READILY CHANGED WHEN MARKET CONDITIONS INDICATE THAT AN IMMEDIATE CHANGE IN THE OUTPUT IS DESIRABLE
5. LON RUN IS DEFINED AS THAT PERIOD OF TIME ( PLANNING HORIZON) IN WHICH ALL THE INPUTS ARE VARIABLE
6. VARIABLE PROPORTION PRODUCTION IMPLIES THAT OUTPUT CAN BE CHANGED IN THE SHORT RUN BY CHANGING THE AMOUNT OF VARIABLE INPUTS WITH COOPERATION OF FIXED INPUTS
7. FIXED PROPORTION PRODUCTION MEAN THERE IS ONE AND ONLY ON RATIO OF INPUTS THAT CAN BE USED TO PRODUCE A GOOD
8. SHORT RUN COSTS ARE THE COSTS OVER A PERIOD DURING WHICH SOME FACTORS OF PRODUCTION ARE FIXED
9. THE LONG RUN COSTS ARE THE COSTS OVER A PERIOD DURING LONG ENOUGH TO PERMIT THE CHANGE OF ALL THE FACTORS OF PRODUCTION
10. THE ALTERNATIVE COST OR OPPORTUNITY COST OF PRODUCTION OF ONE UNIT OF COMMODITY X IS THE AMOUNT OF COMMODITY Y MUST BE SACRIFICED IN ORDER TO USE RESOURCES TO PRODUCE X RATHER Y
11. TOTAL COSTS ARE SPLIT INTO TWO GROUPS TOTAL FIXED COST AND TOTAL VARIABLE COST AND TOTAL FIXED COST
12. SHAPE OF TFC IS PARALLEL TO X AXIS
13. THE TOTAL VARIABLE COST IN THE TRADITIONAL THEORY OF THE FIRM HAS BROADLY INVERSE SHAPE S
14. THE AVERAGE FIXED COST IS FOUND BY DIVIDED TOTAL FIXED COST BY THE LEVEL OF OUTPUT
15. THE AVERAGE VARIABLE COST IS OBTAINED BY DIVIDED TOTAL VARIABLE COST WITH THE CORRESPONDING LEVEL OF OUTPUT
16. THE MARGINAL COST IS DEFINED AS THE CHANGE IN TOTAL COST WHICH RESULT FROM CHANGE IN ONE UNIT
17. THE AVERAGE VARIABLE COST IS A PART OF THE AVERAGE TOTAL COST AND IS REFLECTS THE LAW OF VARIABLE PROPORTIONS
18. THE LONG RUN AVERAGE COST I SHOWS THE MINIMUM UNIT OF COST OF PRODUCING EVERY FEASIBLE LEVEL OF OUTPUT
19. THE RISING PART OF THE LAC CURVE IS ATTRIBUTED TO DIS ECONOMIES OF THE SCALE WHICH ESSENTIALLY MEANS LIMITATION TO EFFICIENT MANAGEMENT