ECO100Y5 Lecture Notes - Lecture 10: Marginal Product, Opportunity Cost

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16 Apr 2016

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Tells us the maximum amount of output a firm can produce using different combinations of its two inputs: labor and capital. In the short run (sr), at least one of a firm"s inputs (capital) is fixed while the other (labor) is variable paper (2) In the long run (lr) a form can vary all inputs, adopt new technology, or change the size of its plant paper (2) Production of the short run paper (3) Total product (quantity/output) is the amount produced in a given time period. Average product of labor is the total product divided by the total number of workers used in the production. Marginal product of labor: additional output produced due to hiring additional worker. Mpl = change in tp/ change in l. Average product is maximum when it is equal to marginal product: The average product of a factor of production is obtained by dividing total product by the number of units of the factor of production.

Related Questions

A firm uses two inputs in production: capital and labor. In the short run, the firm cannot adjust the amount of capital it is using, but it can adjust the size of its workforce. What happens to the firm’s average total cost curve, the average variable cost curve, and the marginal cost curve when
a. the cost of renting capital increases?
b. the cost of hiring labor increases?

ivorybadger420

Consider a firm whose technology is given by the production function: y = f (K,L) = (N+1)L + 2√K. Assume that input prices for labour, L, and capital, K, are w = 1 and r = 2 respectively. a)Find the firm’s short run total cost function assuming the firm cannot hire more workers nor fire its only worker, i.e. L = 1 is fixed.

b)Find the firm’s short run marginal cost, average variable cost and average fixed cost. Draw the three of them in the same graph. What is the short-run supply of the firm?

c)Find the firm’s long run total cost function, i.e. when all factors are variable.

d)Find the firm’s long run marginal cost and average cost. Draw them in the same graph. What is the long-run supply of the firm?

coralpug822

constant costs

increasing returns to scale

constant returns to scale

isocost curve

decreasing returns to scale

isoquant

diseconomies of scale

long-run average cost

economies of scale

long-run marginal cost

economies of scope

marginal rate of technical substitution

expansion path

short-run expansion path

___A curve that displays all the various combinations of inputs that will produce a given amount of output.

___The rate at which one input is substituted for another along an isoquant.

___Line that shows all the possible combinations of inputs that can be purchased for a given total cost.

___A curve showing all of the cost-minimizing levels of input usage for various levels of output.

___When the usage of all inputs is increased by an equal proportionate amount, output ___increases by exactly the same proportion.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a larger proportionate amount.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a smaller proportionate amount.

___Cost per unit in the long run.

___The change in long-run total cost per unit change in output.

___When long-run average cost falls as output increases.

___When long-run average cost increases with increases in output.

___Long-run average and marginal costs are equal for all levels of output.

___The situation in which the joint cost of producing two goods is less than the sum of the separate costs of producing the two goods.

___Horizontal line showing the cost-minimizing input combinations for various output levels when capital is fixed in the short run.

aquamarineguinea-pig889

ECO100Y5 Lecture Notes - Lecture 10: Marginal Product, Opportunity Cost

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