EC 201 Lecture Notes - Lecture 11: Marginal Cost, Fixed Cost, Marginal Product
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Agenda 11/16/16: behind the supply curve, exam 2 scores, extra credit, sapling learning homework due this saturday. Production function: relationship between the quantity of inputs a firm uses and the quantity of output it produces. Fixed input: input whose quantity is fixed for a particular period. Variable inputs: input whose quantity the firm can vary at any time. The production of goods is a function of fixed inputs and variable inputs. Short run: at least one input is fixed. Total product curve: shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input. Marginal product of labor: captures the productivity for each individual worker, how productive is each individual worker. An increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input. Total cost of producing a given quantity of output: