ECON 1B03 Chapter Notes - Chapter 13: Average Variable Cost, Marginal Cost, Marginal Product
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ECON 1B03 Full Course Notes
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From the production function to the total-cost curve. The total product (tp) and total cost (tc) curves are inverses of each other. Marginal cost (mc): the change in total cost that arises from an extra unit of production; measures the rate of change in total costs as total product changes. Cost curves and their shapes: the costs of production. Costs as opportunity costs explicit costs: input costs that require an outlay of money by the firm implicit costs: input costs that do not require an outlay of money by the firm; time, other options. The cost of capital for firms could be considered an opportunity cost or an investment. The production function production function: the relationship between quantity of inputs used to make a good and the quantity of output of that good. Marginal product: the increasing rate of change in output that arises from an additional unit of input.