ECON-101 Lecture Notes - Lecture 9: Opportunity Cost, Armoured Fighting Vehicle, Fixed Cost
18 Jan 2016
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Ex) 1 person running a bakery, if only 1 person, productivity decreases as have to work in kitchen and sales. Hiring at least 1 person is essential. (have to hire) Specialization of labour taking a large task and separating it to multiple tasks. Convex: downsweep shape (if youre standing on horizontal axis it is coming towards you) Concave: upsweep shape (if you"re standing on horizontal axis going away from you) Marginal product of labor (mpl): in economics, slope is referred to mpl. The measure of productivity when hiring another worker. When hiring another position, you have to decide whether to hire or not. Diminishing mpl: if you hire another person the specialization of labor diminishes. If hire, output increases, but not at the same rate as when 1st person was hired. Coordination issues: maximizing sales does not mean maximizing profits. If hire another person and business is small, too many people can decrease productivity (have to fire)
