01:220:102 Lecture Notes - Lecture 8: Fixed Cost

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rubysalmon273

17 May 2018

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1. Basics

1. Law of Diminishing Marginal Productivity or Returns

2. Relationship among Average and Marginal Cost and Product Curves

3. Economies of Scale

4. Relationships

5. Short and Long Run Cost Curves

6. Costs

2. Production

1. Short Run vs. Long Run

1. Law of Diminishing Marginal Productivity or Returns

1. a short run phenomenon

2. at first, production increases at an increasing rate

1. MPPs becoming increasingly larger

2. MPPs- marginal physical products

4. then it increases at a decreasing rate, and eventually decreases

2. Relationship to Costs

1. Average physical product

1. APP = (total output) / (variable input)

2. Marginal physical product

1. MPP = (change in output) / (change in input)

3. The relationship of MPP to APP is the converse of the relationship of

MC to AVC

1. both:

1. as the marginal is less than the average, the average is

declining

2. MPP intersects APP at APP maximum point

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Related Questions

. The following table summarizes the short-run relationship between a firm's total labor input and its total output. (9 points)

Labor Input	Total Product	Marginal Product	Average Product
0	0
1	20
2	46
3	75
4	102
5	125
6	138
7	140
8	136

a. Fill in the columns labeled "Marginal Product" and "Average Product."

b. Over what range of labor input does the firm experience increasing marginal returns? Diminishing marginal returns? Negative marginal returns?

c. Comparing marginal product to average product, under what circumstances will average product rise? Under what circumstances will average product fall?

beigewasp862

TRUE OR FALSE

____ 16. The law of diminishing marginal returns provides an explanation for why Average Cost eventually increases as output is expanded in the short run.

____ 17. The marginal product is the increase in output per additional unit of input.

____ 18. As output increases, marginal cost increases, reaches a maximum, and then falls.

____ 19. The marginal product curve rises when the marginal cost curve rises.

____ 20. If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level.

plumjellyfish99

1. The slope of the total product curve measures

a. the marginal rate of technical substitution.

b. marginal product.

c. average product.

d. the maximum average product.

e. minimum product.

2. The Law of Diminishing Returns to a variable input (such as labor) assumes that

a. there is at least one fixed input.

b. all inputs are changed by the same percentage.

c. the firm is operating in the short run.

d. all inputs are held constant.

e. a and c.

3. An isoquant curve identifies

a. the maximum output possible, given a fixed budget.

b. the different combinations of goods the can be produced, given fixed amounts of inputs.

c. the different combinations of inputs that can be used to produce a fixed rate of output.

d. none of the above.

4. The ratio of total productivity to the total quantity of a variable input being used in production is

a. equal to marginal physical productivity of the input.

b. constant as employment levels of the input vary.

c. equal to average physical productivity of the input.

d. equal to the marginal rate of technical substitution.

01:220:102 Lecture Notes - Lecture 8: Fixed Cost

01:220:102 Full Course Notes

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