ECON 1P91 Lecture Notes - Lecture 8: Marginal Product, Economic Efficiency, Profit Maximization
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ECON 1P91 Full Course Notes
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Total product or output divided by the variable input (labor). Change in total product when labor is increases by one unit. Mpl = tp / l or q / l. 0 to a, output increasing at an increasing rate. The steeper the slope of tp, the higher the level of mp curve. Corresponds with pt, w, where mpt is at a maximum. Ray from origin is tangent to total product curve (q). 0 to i, output is increasing at an increasing rate. After i, output is increasing at a decreasing rate. Corresponds with pt, j where apt is at a maximum. I to m, output is increasing at a decreasing rate. Occurs when more of a variable input (labor) is applied. The marginal product of labor eventually diminished, or the additional labor adds increasingly smaller amounts to output. Diminishing marginal and average product of labor influence to cost of. What you would have bought with that same money.