Economics 1021A/B Chapter Notes - Chapter 11: Short Turn, Variable Cost, W. M. Keck Observatory

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Bruce Hammond

Document Summary

The short run: short run time frame in which the quantity of at least one factor of production is fixed, plant fixed factors of production including capital, land, and entrepreneurship. Labour is the variable factor of production: to increase output in the short turn, a firm must increase the quantity of a variable factor of production which is usually labour. Short-run technology constraint: the relationship between output and quantity of labour employed is described using 3 concepts, total product maximum output that a given quantity of labour can produce, higher the labour, higher the total product. Curve steeper as employment increases and then becomes less steep. Separates attainable (below the curve) output levels from unattainable (above the curve) Points below the curve are inefficient use more labour than necessary to produce a given output. Height of a bar measures marginal product. Marginal product also measured by slope of total product curve (change in value on y-axis/change in value of x-axis)