Glossary of Terms
- Average Physical Product: calculates the average output for each level of input used. It is calculated as APP = Quantity/Input
- Capital: a produced means of production. Usually in a farming operation capital is the machinery or financial capital such as a bank loan.
- Ceteris paribus: means “all else equal” and allows us to evaluate the change in one factor of production while holding all others constant.
- Decreasing returns to scale: as we increase the scale of production by adding inputs, we will get less and less output, although output is still increasing.
- Factors of production: these are all the inputs that go into a production process and include in general, land, labour, capital, and raw materials.
- Increasing returns to scale: as we increase the scale of production by adding inputs, we will get increasingly more output. Each additional unit of input adds increasingly more to the total output.
- Inputs: In economics, factors of production, resources, or inputs are what are used in the production process to produce output.
- Labour: a variable factor of production
- Land: a factor of production
- Marginal Physical Product: the additional product produced as a result of a small addition of input. This can be calculated as (Q2 – Q1)/(I2 – I1)
- Negative returns to scale: the point on the production function where addition of another unit of input will decrease the total amount of output.
- Output: finished goods and services also known as quantity, or products.
- Production Function: the graphical relationship between an input and an output where other factors of production are held constant.
- Raw materials: inputs or factors of production
- Technology: often machinery, equipment and processes derived from scientific knowledge for practical purposes, especially in industry.
AAFC (2015). We grow a lot more than you may think. Retrieved from: http://www.agr.gc.ca/eng/about-us/publications/we-grow-a-lot-more-than-you-may-think/?id=1251899760841
FAO (2016). The role of technology. Retrieved from: http://www.fao.org/docrep/004/y3557e/y3557e09.htm