Class Notes (835,529)
Canada (509,225)
Economics (949)
Lecture

Chapter 11 Notes.docx

3 Pages
118 Views
Unlock Document

Department
Economics
Course
Economics 1021A/B
Professor
Emilie Rivers
Semester
Fall

Description
Economics Chapter 11 – Output and Costs Decision Time Frames  Overall Goal: maximize attainable profit  Biggest decision: what industry to establish a firm, expectation that TR will exceed TC The Short Run  Quantity of at least one factor of production is fixed  Plant: fixed factors of production  Short run decisions are easily reversed  Change output by changing quantity of labour it employs The Long Run  Quantities of all factors of production can be varied  A firm can change its plant  LR decisions are not easily reversed  Sunk Cost: past expenditure on a plant that has no resale value o Irrelevant to firm’s current decisions Short Run Technology Constraint  Product Schedules – how quantity produced increases with more labour, productivity of labour o Total product – max output that a given quantity of labour can produce each increase in employment increases total product o Marginal Product: increase in total product that results from a one- unit increase in the quantity of labour employed o Average Product – (total product) / (quantity of labour) o As quantity of labour employed increases:  Total product increases  MP increases initially but eventually decreases  AP increases initially but eventually decreases  Total Product Curve – graph of total product schedule, separates attainable from unattainable output levels, anything below the curve are inefficient  MP Curve – height of the curve measures the slope of the total product curve at a point, change in output due to an additional worker o Increasing Marginal Returns – MP of an additional worker exceeds the Mp of the previous, increases specialization and division of labour o Diminishing MR – Mp of an additional worker is less then the MP of the previous worker  Average Price Curve – MP curve “pulls” the AP curve o MP>AP, AP increases o MP
More Less

Related notes for Economics 1021A/B

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit