ECON 1116 Chapter Notes - Chapter 11: Average Cost, Average Variable Cost, Fixed Cost
Document Summary
The production function: is the relationship between the quantity of inputs a firm uses and the quantity of output it produces. Fixed input: an input whose quantity is fixed for a period of time and cannot be varied. Variable input: an 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 input. Marginal product: of an input is the additional quantity of output that is produced by using one or more unit of that input. Diminishing returns to an input: when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input.