ECO 201 Lecture Notes - Lecture 10: Average Variable Cost, Marginal Cost, Marginal Product
Document Summary
What is affect on average total cost, marginal cost, average variable cost of. Improved technology leads to marginal product of labor and average product of labor increasing. Price of variable inputs leads to an increases which leads to marginal cost and average variable cost increasing. Price of fixed input increases which leads to average fixed cost increasing. +no effect on average variable cost and marginal cost. In long run, all costs are variable and there are no fixed costs. Shows relationship between maximum output attainable and quantities of capital and labor. Increase in total product from one more unit of capital. Long-run average cost curve is relationship between lowest attainable average total cost and output when both the plant size and labor are varied. Minimum efficient scale is smallest quantity of output at which long-run average cost reaches its lowest level. As mes rises relative to consumer demand, the number of rims in the industry will fall.
