3/19 - Other concepts of cost: Since it’s in the short...

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3/19/08 Our job was to establish a pattern between output and cost At least in the short run we’ve got one big piece of the pattern. It would be incorrect to say “because of the law of eventually diminishing marginal product.” Correct: “ Since a uniform increase in labor causes output to go up in smaller and smaller amounts, it follows that uniform increase in output which will require progressively larger increases in labor, and thus progressively, larger increases in cost.”
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Unformatted text preview: Other concepts of cost: Since it’s in the short run, a firm will have both fixed and variable costs. Remember, short run= firm cannot adjust the size of the factory, which implies that it cannot change the cost of the factory, TC=VC + FC Let FC/Q be set as AFC ATC is set as AVC = AFC VC/Q = AVC TC/Q = ATC The Firms Family of Cost Curve...
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.

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