ECO101H1 Lecture 11: Production and Costs Schedules
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ECO101H1 Full Course Notes
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Eco100 - lecture 11: production and costs schedules. Relates quantity of output to quantity of inputs. Short run: one input is fixed while one can vary. Short run: gm vary amounts of labour (overtime, lay-offs), cannot vary numbers of. Long run: gm can vary amount of labour and plants plants. Marginal product of a variable input, in the presence of a fixed input, eventually diminishes. Initially, when hiring, marginal output of each worker increases. At a certain point, adding points of variable factor gives diminishing returns. Makes all meals, attend all ovens, no specialization. Specialization occurs, helps on another, marginal product rises. Kitchen eventually becomes too crowded, chefs must wait to use ovens, etc. Total cost (tc): total of all costs. Total fixed cost (tfc) : total cost of fixed input. Total variable cost (tvc) : total cost of variable input. Marginal cost: increase in total cost / increase in output. If mp (production) rises, mc (cost) falls (and conversely)