Econ 1, Lec 13

Econ 1, Lec 13 - 1 Econ 1 Winter 2008 RATIKA NARAG Ph.D...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 Econ 1, Winter 2008 RATIKA NARAG, Ph.D. LECTURE 13 Admin: Office hours today: 9:15 -11:15 am No office hours on 02/28 LECTURE 13 Total Product Curve and MP – TP curve shows the PF graphically; upward sloping as more output is produced when more inputs are hired – TP curve becomes flatter as the MP of labor declines as more and more workers are hired – Slope of the TP curve: MP LECTURE 13 Fixed Input: Any resource for which the quantity cannot change during the period of time under consideration Variable Input: Any resource for which the quantity can change during the period of time under consideration LECTURE 13 Production Costs in the SR – Average fixed costs: – AFC declines as Q increases – Average variable cost: – Average total cost: Q TFC Q TVC Q TC LECTURE 13 Example: AFC 1,000 4 ? AFC 1,000 5 1,000 3 1,000 2 1,000 1 1,000 TFC Q 2 LECTURE 13 AFC = TFC/Q – TFC do not change ( remember, they are fixed!) 250 1,000 4 200 1,000 5 333.333 1,000 3 500 1,000 2 1,000 1,000 1- 1,000 AFC TFC Q LECTURE 13 AFC = TFC/Q – As the firm makes more (Q goes up), AFC goes down LECTURE 13 Example: TVC 24 3 18 2 10 1 TVC Q LECTURE 13 Total Variable Costs – As the firm makes more (Q goes up), variable cost goes up LECTURE 13 Another Example: 20 20 20 20 20 20 TFC 145 125 4 170 85 50 30 TVC 190 5 105 3 70 2 50 1 20 TC = TFC + TVC Q LECTURE 13 Adding the same amount of TFC to every level of TVC yields TC Remember: TC = TFC + TVC For this reason, the TC curve has the same shape as the TVC curve; it is simply higher by an amount equal to TFC 2 LECTURE 13 AFC = TFC/Q – TFC do not change ( remember, they are fixed!) 250 1,000 4 200 1,000 5 333.333 1,000 3 500 1,000 2 1,000 1,000 1- 1,000 AFC TFC Q LECTURE 13 AFC = TFC/Q – As the firm makes more (Q goes up), AFC goes down LECTURE 13 Example: TVC 24 3 18 2 10 1 TVC Q LECTURE 13 Total Variable Costs – As the firm makes more (Q goes up), variable cost goes up LECTURE 13...
View Full Document

This note was uploaded on 03/20/2008 for the course ECON 1 taught by Professor Nagata during the Fall '08 term at UCLA.

Page1 / 8

Econ 1, Lec 13 - 1 Econ 1 Winter 2008 RATIKA NARAG Ph.D...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online