Economics 1021A/B Lecture Notes - Fixed Cost, Diminishing Returns, Variable Cost

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Biggest decision: what industry to establish a firm, expectation that tr will exceed tc. Quantity of at least one factor of production is fixed. Change output by changing quantity of labour it employs. Quantities of all factors of production can be varied. Sunk cost: past expenditure on a plant that has no resale value: irrelevant to firm"s current decisions. Total product curve graph of total product schedule, separates attainable from unattainable output levels, anything below the curve are inefficient. Mp curve height of the curve measures the slope of the total product curve at a point, change in output due to an additional worker: increasing marginal returns mp of an additional worker exceeds the. Mp of the previous, increases specialization and division of labour: diminishing mr mp of an additional worker is less then the mp of the previous worker. Average price curve mp curve pulls the ap curve: mp>ap, ap increases, mp

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