ECON-UA 2 Lecture Notes - Lecture 11: Diminishing Returns, Opportunity Cost, Marginal Product
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24 Oct 2016
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Process of combining inputs to make goods and services. Methods available for combining inputs to produce a good or service. Firm uses only two inputs: capital and labor. A time horizon long enough for a firm to vary all of its inputs. A time horizon during which at least one of the firm"s inputs cannot be varied. An input whose usage can change over some time period. An input whose quantity must remain constant over some time period. The maximum quantity of output that can be produced from a given combination of inputs. The additional output produced when one more worker is hired. Definition: mpl = change in output / change in labor. As we continue to add more of any one input, holding the other inputs constant. * the graph with the upward pointing arrow. Clicker question: suppose the following graph shows the total product function in black.
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