illuminates us into understanding the behavior of the business firm. The goal of producers or business firms is to maximize profit.

is the process of altering resources or inputs so they satisfy more needs and wants. It is the transformation of inputs or resources into outputs of goods and services. In another definition, it is the process of combining inputs to make outputs

is an input whose usage can change

on the other hand is an input whose quantity must remain constant, regardless of how much output is produced. cannot be changed in the short run

the use of at least one factor of production cannot be changed, or there are fixed inputs

all factors can be changed. In other words, all inputs are variable.

are the payment for the output sold

shows the relationship between quantity of inputs used to make a good and the quantity of output of that good. It can be expresses as an equation, table or graph showing the maximum output of a commodity that a firm can produce per period of time with each set of inputs.

is the output produced by using different quantities of an input with fixed quantities of the other. It is the market value of the inputs used in production

is the output divided by the variable input used

is the change in TP per unit change in the variable input used

It is the "property whereby the marginal product of an input declines as the quantity of the input increases

is the increase in total cost resulting from hiring an additional unit of the variable resource.

shows the various combinations of two inputs that the firm can use to produce a specific level of output. Any point in the isoquant yields the same level of output. Economic region of production is given by the negatively sloped segment of the isoquant. They are negatively sloped, convex to the origin and do not intersect

is the amount of capital that a producer is willing to give up in exchange for labor. It is the slope of the isoquant. The convex shape of the isoquant illustrates the willingness of the producer to give up one unit of input for another

line is a set of combinations of labor and capital that yield the same total cost for the firm. It shows the various combinations of inputs that a firm can purchase or hire at given costs

is the tangency of the isocost and the isoquant. It maximizes production at the given outlay and prices of capital and labor

is a line that connects the cost minimizing input combinations as the quantity of output, Q varies, holding input prices constant

These are costs that do not vary with output. Examples of these costs are depreciation of buildings and machineries, rent expenses on leased plant, and interest payments on borrowed capital

these are costs that vary with output. Examples are raw materials, wages, tax payments, and operating expenses (electricity, fuel and water

it is the sum of total fixed costs and toral variable costs

This refers to the total fixed costs divided by the number of output produced

This refers to the total variable costs divided by the number of output produced

This refers to the total output divided by the number of output produced

Refers to the change in total cost divided by the change in output produced. It is the additional cost incurred from producing additional unit of output

are input costs that require an outlay of money by the firm. These are the costs of inputs that producers are willing to pay at market prices.

are costs that do not need the outlay of money by the firm. These are the opportunity costs of buying inputs. This includes the alternative cost of investment, time or rate of return.

• a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker • There are many buyers and many sellers in the market. • The goods offered by the various sellers are largely thesame. • Firms can freely enter or exit the market.

Competitors are not able to enter the market, and the monopoly can easily prevent competition from developing their foothold in an industry by acquiring the competition.

There is only one seller in the market, meaning the company becomes the same as the industry it serves.

The company that operates the monopoly decides the price of the product that it will sell without any competition keeping their prices in check. As a result, monopolies can raise prices at will.

A monopoly often can produce at a lower cost than smaller companies

is a means of communication with the users of a product or service.

are messages paid for by those who send them and are intended to inform or influence people who receive them.

Television ads and radio ads

Brochures, flyers, and other forms of printed materials sent in the mail are all forms of

Billboards and advertisements on public transportation are forms of

Newspapers, magazines

Movies, dramas