Topic 7 production & cost schedule (week seven oct 25th-nov 1st) Outline: production function, product schedule (short run) - law of diminishing returns: cost of productions (short run) - properties of firms" cost curves: average costs. - why curves are shaped that way and their intercepts: long-run average cost curve, opportunity cost and the measurement of economic profit. Production function: relationship between output and the quantity of input. Short-run: one input (capital) is fixed; while on input (labor) can vary; Long-run: all inputs (capital, labor, etc. ) can vary. Short-run: gm can vary the amount of labor (overtime, lay-offs), but cannot vary the number of plants (selling land); Long-run: gm can vary both number of plants and amount of labor; Increase in total output divided by increase in labor input; The marginal product of a variable input, in the presence of a fixed input, eventually diminishes. e. g. numerical example.