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Lecture

Technology, Production Costs.docx

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Department
Psychology
Course
PSY-0013
Professor
Sam Sommers
Semester
Spring

Description
04/10/2014 SECTION 5 Technology, Production, and Costs Law of diminishing returns: at some point, adding more variable input (e.g. labor) to the same amount of  fixed input (e.g. capital), will cause the marginal product of the variable input to decline Marginal product of labor: additional output a firm produces as result of hiring one more worker When increasing, total output increases at increasing rate When decreasing, total output increases at decreasing rate Average product of labor: total output produced by a firm divided by quantity of workers (average of  marginal products of labor) MC and AC shape (U­Shape) Marginal product of labor rises ▯ marginal cost of output falls Marginal product of labor falls ▯ marginal co
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