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Economics Notes 9.10.07

Economics Notes 9.10.07 - Long run all inputs are variable...

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More efficiency, sacrifice equity More equity, pie is small (less efficiency) Firms goal is to maximize profit = total revenue – total costs Pi sign = TR-TC TR = Price X quantity it sells for TC (economic) include explicit (stuff we pay money for) and implicit (“implied cost” for starting business) Accounting profits > economic profits Supply curve – at various prices, how many units are the producers willing and able to sell Short run vs. long run: in the short run, at least input (factor of production) is fixed
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Unformatted text preview: Long run: all inputs are variable Marginal product of labor (MPL): the extra output for the next unit of labor = delta Q/ delta L Law of diminishing returns: adding more workers to land, output is increasing at smaller and smaller rates MPL equals the slope of the production function MPL diminishes as L increases The production gets flatter as L increases Marginal cost, MC = delta TC/ delta Q MC = supply curve in the short run...
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