ECO100Y5 Lecture Notes - Lecture 6: Marginal Product, Average Variable Cost, Variable Cost
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ECO100Y5 Full Course Notes
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Document Summary
Inputs, production, and costs in the long run. Firms are assumed to be profit maximisers. Just like for consumers, allows us to make precise predictions about behaviour. Each firm is assumed to be a single, consistent, decision making unit. In order to make predictions about firm behaviour then, we must define. Firms use four types of inputs for production. Inputs that are outputs of some other firm - intermediate products (i) Inputs that are the service os of labour (l) Inputs that are the services of physical capital (k) Production function: functional relation showing the maximum output that can be produced by any given combination of inputs. Technological relationship between the inputs that a firm uses and the output that it produces. Alpha = relative components of capital vs labour. Short run: a time period in which the quantity of some inputs, called fixed factors, cannot be changed.
