ECON 1126 Chapter Notes - Chapter 11-13: Marginal Product, Market Power, Demand Curve
Document Summary
Atc = total cost / q of output produced mc = change in tcost / change in quantity prod. Marginal prod of labor - add output produced from hiring 1 more worker. Law of diminishing returns-more input added to same amt of fixed input -- marginal product falls. Q can still increase -- but add amt per worker starts to decreases. Avg prod of labor - total output / q of workers. Mpl > apl -- apl increasing mpl < apl --apl decreasing = @ apl max. Mc falls then rises u-shaped mc curve mpl rises then falls. All costs are variable tc = vc & atc = avc. Economies of scale - long run atc falls as output increases. Purchase inputs at lower costs than other competitors. Perfectly competitive markets: many buyers and sellers. Price taker: can"t control prices of goods controlled by market. Profit max - difference b/w tr & tc is largest.