ECON 1P91 Lecture Notes - Lecture 6: Marginal Revenue, Economic Surplus, Demand Curve
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ECON 1P91 Full Course Notes
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Diminishing marginal returns: with the addition of l=x or after l=x-1. Diminishing marginal returns: after mp is at a max or after mc is at a min. This states that when more of a variable input is added, the marginal product gradually diminishes. Marginal cuts the average variable cost curve or shutdown point when p min= min avc = mc. Any price below this level, the irm will shut down. Any price above this level, irm will operate. Firm reaches its eicient point/break even point/at capacity where p. Tr = p * q = 700 (20) = 14,000. Economic proits = tr tc = 0 [normal proits] There are zero economic proits or normal proits (bc its breakeven point) Lrac curve eventually slopes upward because of the diseconomics of. Sratc curve slopes upward because of diminishishing margiial returns. Diseconomies of scale- occur when all inputs are proportionately increased and the output increases by less than the increase in inputs.