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Lecture 74

ECON 1010 Lecture 74: Lecture 74

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University of Manitoba
ECON 1010
Laura K.Brown

oS82 1. As marginal product decreases, slope gets flatter 1. As marginal product increases, slope gets steeper 2. Inverse relationship between marginal cost and marginal product 1. Costs increase, as marginal product decreases (productivity) 3. Diminishing marginal product: the property whereby the marginal product of an input declines as the quantity of the input increases, other things equal 1. Output rises by a smaller and smaller amount for each additional worker 1. Why? – if workers increase, but not other factors of production (land, capital, etc), the average worker has less to work with, so will be less productive 1. In general, MPL diminishes as L rises whether the fixed input is land or capital 2. As production increases or decreases, variable costs are changing and fixed costs remain constant, regardless of how much we produce 3. Doesn’t matter whether or not our marginal product is 1000 units or 1 unit, our cost of labour is still the same (constant) From the Production Function to the Total-
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