chapter 11 - micro
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Last updated 9:04 PM on 10/30/22
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17 Terms
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Short run
one output is variable, other is fixed. Variable input tends to be labor while fixed input tends to be capital
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long run
all inputs tend to be variable
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sunk costs
costs that cannot be recovered and hence are irrelevant towards decision making
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total product
total output produced in a given time period
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marginal product
change in total product that results from one-unit increase in quantity of labor employed
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average product
total product divided by quantity of labor employed
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as quantity of labor increases,
total product increases, marginal product increases initially but eventually decreases, average product decreases
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diminishing marginal returns
arises because each additional worker has less access to capital and less space in which to work
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total cost
the cost of all resources used
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total fixed cost
cost of the firm's fixed inputs (do not change with output)
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total variable cost
cost of firms variable input (change with output)
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total cost =
total fixed cost + total variable cost
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marginal cost
increase in total cost that results from a one unit increase in total product
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average cost
total cost per unit of output
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average fixed cost
total fixed cost per unit of output
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average variable cost
total variable cost per unit of output
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average total cost =
average fixed cost + average variable cost