What Is the Difference Between Flow and Stock Resources

question 35

Essay

What is the difference between flow and stock resources?

Interpret the relationship between economies of scale, diseconomies of scale, and long-run cost curves.

Comprehend the relationship between output levels and average/marginal costs.

Grasp the idea of economies and diseconomies of scope.

Appreciate the significance of returns to scale on long-run costs.

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Definitions:

Production Possibilities Curve

A graphical representation showing the maximum combination of goods and services that can be produced from a fixed set of resources.

Bowed Outward

A description of a production possibility frontier that demonstrates the increasing opportunity cost of producing one good over another.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to invest in one option over others.

Rectangles

A four-sided flat shape where every angle is a right angle and opposite sides are parallel and equal in length.