ECO100Y5 Chapter Notes - Chapter 11: Average Cost, Average Variable Cost, Diminishing Returns
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ECO100Y5 Full Course Notes
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How much decisions : quantity of output to produce maximum pro t. Marginal analysis can be used to understand these output decisions decisions that lie behind the supply curve. A production function is the relationship between the quantity of inputs a rm uses and the quantity of output it produces. A rms production function underlies its cost curves. A xed input is an input whose quantity is xed for a particular period and cannot be varied (example cannot change the size of farm) A variable input is an input whose quantity the rm can vary at any time. (example number of workers to hire) The long run is the period in which all inputs can be varied. (example in long run can buy or rent land, therefore no. The short run is the period in which at least one input is xed. Quantity produced is dependent on variable input.