ECON1131 Chapter Notes - Chapter 11: Average Cost, Average Variable Cost, Marginal Cost
Document Summary
Production function: describes relationship between q produced and inputs used. Fixed inputs: inputs whose quantity is fixed for a period of time and cannot be varied. Variable inputs: can vary at any time. Long-run: firms have enough time to adjust inputs. Short-run: at least one of the inputs is fixed. Total product function: short run version of production function. Total product curve: shows relationship between quantity produced and quantity of input used for a given amount of fixed input. Marginal product: slope of total product curve, Mpl = change in quantity / change labor. Decreasing mpl (diminishing returns to labor): because more workers have to work in the same limited space with the same limited amount of equipment. Pretty much when having more workers or something else stops being useful because there isn"t enough workspace. Fixed cost: amount paid for fixed inputs. Variable input: amount paid for variable cost. Total cost: sum of vc and fc.