ECN 104 Lecture Notes - Marginal Product, Production Function

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21 Nov 2013
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Explicit + implicit costs = total costs. Slide 6: you can hire as many labour, but land is fixed. Marginal product of labour (mpl) = change in q / change in l. Mpl is the slope of the production function. Diminishing marginal product: the marginal product of an input declines as the quantity of the input increases. When asked about marginal, it is a change in something over a change in something. Mc = change in total cost / change in q. The efficient scale: the lowest point of the atc. When mc < atc, atc is falling. When mc > atc, atc is rising. The lratc is the envelope or the irrelevant parts of the sratc. Economies of scale: atc falls as q increases. Constant returns of scale: atc stay the same as q increases.

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