Econ unit 5

poopy shmidt

total product- TP

total output or quantity produced

marginal product- MP

additional output generated by additional outputs

change in TP

when MP=0

TP is maximized

average product- AP

output per unit of input

AP= TP/ #of resources

fixed resources

resources that don't change with quantity produced (factories)

variable resources

resources that change with quantity produced (workers)

law of diminishing marginal returns

as variable resources added to fixed resources the additional output produced from each additional workers will eventually decrease

short run

period of time in which at least one resource is fixed

long run

period of time in which all resources are variable

total fixed cost

constant #

TFC

TFC= TC-TVC

TFC=AFCxQ

total variable cost

TVC

TVC= TFC- TC

TVC=AVCxQ

total cost

TC

TC= TVC+ TFC

average fixed cost

AFC

AFC= TFC/Q

average variable cost

AVC

AVC=TVC/Q

average total cost

ATC

ATC= AFC+AVC

ATC= TC/Q

marginal cost

change in TC

change in TVC

increase in fixed cost

increases: TFC, TC, AFC, ATC

no change: TVC, AVC, MC

increase in variable cost

increases: TVC, TC, AVC, ATC, MC

no change: TFC, AFC

economies of scale

Q increases while LRATC decreases

constant returns to scale

Q increases while LRATC does not change

diseconomies of scale

Q increases while LRATC increases

LRATC

TC/Q