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ECON 2020 (Dr. Macy Finck) October 10-14

by: Gabrielle Ingros

ECON 2020 (Dr. Macy Finck) October 10-14 Econ 2020

Marketplace > Auburn University > Economics > Econ 2020 > ECON 2020 Dr Macy Finck October 10 14
Gabrielle Ingros
GPA 3.8

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About this Document

These are the notes from the lectures given in class.
Principles of Economics: Microeconomics
William M. Finck
Class Notes
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This 2 page Class Notes was uploaded by Gabrielle Ingros on Saturday October 15, 2016. The Class Notes belongs to Econ 2020 at Auburn University taught by William M. Finck in Fall 2016. Since its upload, it has received 7 views. For similar materials see Principles of Economics: Microeconomics in Economics at Auburn University.


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Date Created: 10/15/16
Lecture 6 • Review: Q TFC TVC TC MC AFC AVC ATC 0 120 0 120 ---- ---- ---- ---- 1 120 60 180 60 120 60 180 2 120 90 210 30 60 45 105 3 120 150 270 60 40 50 90 4 120 240 360 90 30 60 90 5 120 380 500 140 24 76 100 • Law of Diminishing Marginal Returns – as successive units of a variable resource are added to a fixed resource, the marginal product of the variable resource eventually decreases o LDMR explains why the short run cost curves eventually increase as output increases o Only applies in short run (no fixed resources in long run) • Formulas: o Marginal Product of Labor – the additional output produced by one more unit of labor § MP L (change)Q / (change)L § Total Product = Q = (summation)LP § MC = Wage / MP L • Law of Diminishing Marginal Returns Table: K L W Q MP L MC = W/MP L 1 0 $5 0 ---- ---- 1 1 $5 10 10 $0.50 1 2 $5 30 20 $0.25 1 3 $5 40 10 $0.50 1 4 $5 44 4 $1.25 1 5 $5 46 2 $2.50 • As returns (ML ) diminish, marginal cost increases • Long Run Costs Graph: o Economies of Scale/Increasing Returns to Scale – as q rises, LRATC falls o Diseconomies of Scale/Decreasing Returns to Scale – as q rises, LRATC rises • Change in Long Run Costs Graph: • Factors that Shift Long Run Cost Curves: o (1) Input Prices – input prices and cost curves move together o (2) Regulation/Taxes – taxes and costs move together o (3) Technology – as technology improves, costs fall


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