EC120 Lecture Notes - Lecture 9: Marginal Product, Marginal Cost, Production Function
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Implicit costs: input costs that do not require an outlay of money by the firm: ex. Helen is in the cookie making business, however she could be a computer programmer working at /hour. Every hour she spends at her cookie factory she gives up of income: ex. The interest that could"ve been earned on start-up money if it were invested. If helen invested the 000 she used to buy her factory at 5%, she would be earning 000 per year. Production costs: production function: the relationship between quantity of inputs used to make a good and the quantity of output of that good, marginal product: the increase in output that arises from an additional unit of input, ex. If a company goes from 1 to 2 workers and production increases from 50 to. The marginal product of the 2nd worker is 40 cookies.
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