Econ exam 3

Price takers

a firm that cannot influence market price bc its production is insignificant to the total market

Total cost equation

total variable cost+ total fixed cost

Short run

period in which quatity of atleast one of production is fixed (captial,land, entreprenuership)(labor is a variable)

Long run

period in which quantities of all factors can be varied

Total product

maximum output/quantity

Marginal Product of Labor

the increase in total product (output)
that results from a one-unit increase in the quantity of labor employed

Diminishing Returns

occur when marginal product of an additional worker is less than marginal product of previous worker

(more workers using same capital & space is not productive)

Law of diminishing returns

as a firm uses more of a variable factor
of production with a given quantity of the fixed factor of production,

the marginal product of the variable factor eventually diminishes