01:220:102 Chapter Notes - Chapter 12: Average Cost, Average Variable Cost, Diminishing Returns
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01:220:102 Full Course Notes
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Document Summary
Chapter 12 behind the supply curve: inputs and costs. 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 period of time and cannot be varied. Variable input- input whose quantity the firm can vary at any time. Long run- time period in which all inputs can be varies. Short run- time period in which 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 on an input- additional quantity of output that is produced by using one more unit of that input. Marginal product of labor=change in quantity of output/change in quantity of labor. Fixed cost- cost that does not depend on the quantity of output produced; cost of the fixed input.