New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Technology, Production, and Costs

by: Caitrín Hall

Technology, Production, and Costs ARE 1150

Caitrín Hall
GPA 3.9

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

These notes cover chapter 11 from the textbook.
Principles of Agriculture & Resource Economics
Emma Bojinova
Class Notes
Economics, Microeconomics, outline, notes, Money
25 ?




Popular in Principles of Agriculture & Resource Economics

Popular in Agricultural & Resource Econ

This 3 page Class Notes was uploaded by Caitrín Hall on Saturday April 30, 2016. The Class Notes belongs to ARE 1150 at University of Connecticut taught by Emma Bojinova in Spring 2016. Since its upload, it has received 22 views. For similar materials see Principles of Agriculture & Resource Economics in Agricultural & Resource Econ at University of Connecticut.

Popular in Agricultural & Resource Econ


Reviews for Technology, Production, and Costs


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 04/30/16
Chapter 11 Technology, Production, and Costs 11.1 Technology: An Economic Definition  The basic activity of a firm is to use inputs, such as workers, machines, and natural resources, to produce outputs of goods and services  Technology – the processes a firm uses to turn inputs into outputs of goods and services  Technological change – a change in the ability of a firm to produce a given level of output with a given quantity of inputs 11.2 The Shot Run and the Long Run in Economics  Short run – the period of time during which at least one of a firm’s inputs is fixed; U shaped graph of cost vs. quantity of good per week  Long run – the period of time in which a firm can vary all its inputs, adopt new technology, and increase or decreases the size of its physical plant The difference between Fixed Costs and Variable Costs  Total cost – the cost of all inputs a firm uses in production  Variable costs – costs that change as output changes  Fixed costs – costs that remain constant as output changes; y- intercept of graph TC = FC + VC  Economic depreciation – the difference between the amount paid for capital at the beginning of the year and the amount it could be sold for at the end of the year  Explicit costs are sometimes called accounting costs  Economic costs include accounting costs and implicit costs  Production function – the relationship between the inputs employed by a firm and the maximum output it can produce with those inputs 11.3 The Marginal Product and Average Product of Labor  Marginal product of labor – the additional output a firm produces as a result of hiring one more worker o An increase in the marginal product can result from the division of labor and from specialization o Law of diminishing marginal returns – the principle that, at some point, adding more of a variable input (labor) to the same amount of a fixed input (capital) will cause the marginal product of the variable input to decline o Marginal product of labor can be negative The Relationship between Marginal Product and Average Product  Average product of labor – the total output produced by a firm divided by the quantity of workers o The average product of labor is the average of the marginal products of labor 11.4 The Relationship between Short-Run Production and Short-Run Cost  Marginal cost – the change in a firm’s total cost from producing one more unit of a good or service Why Are the Marginal and Average Cost Curves U Shaped?  Marginal cost of output and marginal product of labor are inversely related  The marginal cost of production falls and then rises—forming a U shape —because the marginal product of labor rises and then falls 11.5 Graphing Cost Curves  Average fixed cost – fixed cost divided by the quantity of output produced  Average variable cost – variable cost divided by the quantity of output produced  Q = level of output o ATC = (TC)/Q o AFC = (FC/Q) o AVC = (VC)/Q o Notice: ATC = AFC + AVC  AFC is always declining because as production increases, the denominator grows  ATC is the highest curve on graph because it is the sum of AFC and AVC  MC curve intersects both ATC and AVC Key Facts: 1. When MC < AVC or ATC, it causes them to decrease. When MC is greater, it causes them to increase. When they are equal, they must be at their min points where MC curve intersects. All 3 curves are U shaped. 2. AFC gets smaller as output increases because the denominator grows larger while fixed costs remain constant; “spreading the overhead” *“overhead” refers to fixed costs* 3. The difference decreases between ATC and AVC because it is representing AFC, which gets small as output increases. 11.6 Costs in the Long Run Economies of Scale  There are no fixed costs in the long run  Long-run average cost curve – a curve that shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when not inputs are fixed  Economies of scale – the situation when a firm’s long-run average costs fall as it increases the quantity of output as it produces o Constant returns to scale – the situation in which a firm’s long-run average costs remain unchanged as it increases output o Minimum efficient scale – the level of output at which all economies of scale are exhausted o Diseconomies of scale – the situation in which a firm’s long- run average costs rise as the firm increases output; applies only in long run when the firm is free to vary all its inputs, can adopt new technology, and can vary the amount of machinery it uses and the size of its facility o Diminishing returns applies only to the short run when at least one of the firm’s inputs is fixed Pi = TR – TC = PQ – ATC (Q) = Q (P – ATC)  Table 11.4


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Janice Dongeun University of Washington

"I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.