Chapter 7: Production, Inputs, and Cost Vocabulary:
• Fixed costs Short run oTotal Physical Product
• Variable Cost oLong run 4. Average Physical Product.
• Marginal Physical Product Marginal Revenue Product and
• Law of Diminishing Returns o marginal Cost oTotal costs ar o Total Fixedl Variable Costs - Average cost omarginal Cost o Average Fixed / Variable costs Increasing Returns to scale.
If you want to learn more check out What is the difference between positive reinforcement and negative reinforcement?
• Constant Returns to Scale Decreasing Returns to Scale vo po Definitions: oFixed Costs: the costs of inputs whose quantity does not vary with output and which are incussed even when output is O.
o Variable Costs: costs which change with output. notes
• Short Run: a time horizon within which only variable inputs
We also discuss several other topics like Is it necessary as part of being a christian to be suffering in some way?
We also discuss several other topics like What is the first city in the world to fluoridate its community water supply?
can be adjusted while fixed inputs remain unchanged. antoa
• Long Run: a time horizon within which both fixed and variable inputs can be adjusted. cold son los son
•Total Physical Product & the total output obtained from a
given quantity of input. (TPP) er ein Jeram nein
• Average Physical Product (APP): When x = quantity of input, If you want to learn more check out Is it poor people's fault that they're poor?
APP = TPPIX lo marginal Physical Procluct: (mep) the increase in total output
resulting from one unit increase in the input mpp: ATPPI AX lo marginal Revenue Product (MRP): the increase in total revenue We also discuss several other topics like What is one of the firsts animals to be domesticated?
If you want to learn more check out What is used as a coenzyme in dna synthesis?
that results from a one unit increase in input. MRP mppx price of outpu
Law of Diminishing Returns: as one variable input is increased while all others remain fixed, a point will be reached beyond which the map of the input will begin to decrease. lo marginal Cost: the increase in cost which results from raising
output by one unit, me ATC/AQ
•Total Costs (TC): payment to all inputs. TC = TFC + TVC
• Total Fixed / Variable costs: payment to fixed variable inputs.
• Average Cost : TC IQ, AC= AFC 8+ AVC
ol bro, sinontanborror vegan Definitions: o Average Fixed Variable Cost: ALENCIQ crea bexig. o marginal Costo mc = ATC IAQ = ATVCI AQ droo edonor o Increasing Returns to Scale : (IRS) when all inputs are m increased by the same proportion, output rises by more than that proportion (note: this curve has a negative slope). o Constant Returns to Scale CCRS): when all inputs change a by the same proportion, output changes by exactly the
same proportion. (note: this curve is a horizontal line). N o
• Decreasing Returns to scale CD RS): when all inputs change by the same proportion, output changes by less than that
proportion (note: this curve has a positive slope). Ant main Ideas para dona mirtius rosinon ont som hon o o Optional Production: the firm should hire input until
MRP = price of input wie noriran ventor odprode o marginal - Average Rules: barilo sa oras canon eonroe
some must equal AC when AC is at its minimushoto
o When mc>AC, AC is rising. It tagaito tirous novel
too. When meLAC, AC is falling. Du bord serat your la a
• Cost-Minimization of Two Inputs
also 2 999 tugto costs are minimized when tussen onprange
XAISITA 929 x MPPA MPPB tion and wood priti Nest
Sou In other words, when product per dollar is equal for
be bothinputs, cost is minimized, prven o - croped boder so vies trigo mox it and events o n
9220bo odres Jugewoon