ECONOMICS Lecture Notes - Lecture 18: Marginal Product, Production Function, Isoquant
14 Jun 2021
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When 3 workers are employed tp is 25. 5, when a the 4th worker is employed tp increases to. The mp of the 4th worker therefore is 14. 5 tons. States that as additional units of a variable factor are added to a given quantity of fixed factors, with a given state of technology, the average and marginal products of the variable factor will eventually decline. Points a and b are referred to as the points of diminishing marginal returns and diminishing average returns respectively. In the long run, all factors of production can be varied. Firms aiming to maximize profits will attempt to produce their chosen output by employing combinations of land, labour and capital which minimize their production costs. Isoquants and isocost lines: used to illustrate cost minimization strategies for firms. Given these assumptions, a given quantity of x can be produced using many different combinations of labour and capital.
