01:220:102 Lecture Notes - Lecture 12: Average Cost, Average Variable Cost, Fixed Cost
chrisfive2005 and 37653 others unlocked
57
01:220:102 Full Course Notes
Verified Note
57 documents
Document Summary
Firm: an organization that produces goods and services for sale by transforming inputs into outputs. Quantity of output firm produces depends on quantity of inputs. Production function: relationship between the quantity of inputs a firm uses and the quantity of output it produces. Fixed input: input whose quantity is fixed for a period of time and cannot be varied. Variable input: input whose quantity the firm can vary at any time. Long run: time period in which all inputs can be varied. Short run: time period in which at least one input is fixed. Total product curve: shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed output. Marginal product: change in quantity of output; additional quantity of output that is produced by using one more unit of that input. Marginal product= change in quantity of output / change in quantity of variable input.