ECON 120W Lecture Notes - Lecture 10: Technological Change, Outsourcing, Average Variable Cost
5 Nov 2017
School
Department
Course
Professor
Document Summary
When the marginal product of labour is greater than the average product of labour, then the average product of labour must be increasing. Marginal cost = ( p) / ( q) When graphing a conventional short-run production function, we place the variable input on the horizontal axis and output on the vertical. The short run is a period of time where at least one input us fixed, while the long run is a period of time where all inputs are variable. The relationship between the inputs used by the firm and the maximum output it can produce is known as the production function. If a company has constant marginal cost, and no fixed costs, atc is a horizontal line. Foregone salary and foregone interest are considered implicit cost. For a company with large fixed costs and constant marginal cost efficient scale is infinite, capacity is infinite, average total cost curve is downward, and average variable cost curve is horizontal.
