short run x long run

SHORT RUN

is a period of time in which at least 1 input is fixed as output varies

LONG RUN

A period of time in which all inputs vary as the output varies

fixed inputs

are inputs that do not vary as output varies

variable inputs

are inputs that vary as output varies

K(capital)

is a fixed input

Marginal product(MP)

The additional unit of output by employing an additonal lunit of the variable input

average product(AP)

the ratio of output to the corresponding level of input given that other inputs are constant

If the margin exceeds the average

the average will rise

if the margin is less then the average

the average will fall

If the margin is equal to the average

the average stays the same

IMR(increasing marginal returns)

exist when the additional output of the last worker employed is greater than the additional output of the pervious worker

DMR(decreasing marginal marginal returns)

exist when the addtional output of the last worker employed is less than the previous worker employed

average product is equal to marginal product?

at its peak

inflection point

occurs when (mp) is at its peak point where total product stops increasing at an increasing rate and starts to increase at an decreasing rate