1. Distinguish between the short run and long run in the context of production.

The short run is a time period during which at least one input is fixed and cannot be changed by the firm. For example; If a firm wants to increase output, it can hire more labour and increase materials, tools and equipment, but it cannot quickly change the size of its buildings, factories and heavy machinery. As long as these inputs are forced the firm is operating in the short run.The long run is a time period when all inputs can be changed. Using the example above in this time period the firm can build new buildings and factories and buy more heavy machinery it can change, all of its inputs. In the long run the firm has no fixed inputs all inputs are variable.

2. Define total product.

Total product is the total quantity of output produced by a firm.

3. Define marginal product.

Marginal product is the extra or additional output resulting from one additional unit of the variable input labour.
                                                   

4. Define Average product.

Average product is the total quantity of output per unit of variable input or labour.
                                                       

5. Distinguish between total revenue, average revenue and marginal revenue.

The firms total revenue (TR+ is obtained by multiplying the price at which a good is sold (p) by the number of units of the good sold (Q)
                TR = P x Q
      
                                              Total revenue when price is constant.
                                        
                          
The firms marginal revenue (MR) is the additional revenue arising from the sale of an additional unit of output.
                                          
The firms average revenue (AR) is revenue per unit of output sold.
                                             
           Marginal and average revenue curves when price is constant.
                                   

6. Define Normal profit.

Normal profit can be defined as the minimum amount of revenue that the firm receive so that is will keep the business running.

7. Why do you think positive economic profit is also called 'Super normal' profit or 'abnormal' profit?

Positive economic profit is also known as super normal profit or abnormal profit because it involves profit over and above normal profit if economic growth is zero the firm is earning normal profit. And if economic profit is negative, the firm is making a loss.

8. Explain the law of diminishing returns.

According to the law of diminishing returns as more and more units of a variable input are added to one or more fixed inputs, the marginal product of the variable input at first increases, but there comes a point when it begins to decrease.

9. Define Average cost.

Average cost are costs per units of output, or total cost divided by the number of units of output. It tells us how much each unit of output produced costs on average.

10. Define marginal costs.

Marginal cost is the extra or additional cost of producing one more unit of output. It tells as by how much total costs increase if there is an increase in output by one unit.