Econ Exam 2 Study Guide.pdf - Stephen Grant Econ Exam 2...

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Stephen Grant Econ Exam 2 Study Guide TVC + TFC = TC AVC + AFC = ATC AFC x Quantity = TFC MC = AVC MRTS = K / L MP K /MP L = P K /P L MP K /P K = MP L /P L In the long run all of the firm’s input quantities are variable The total physical product of an input is the same thing as its output The marginal physical product of an input is the addition to output from using one unit of an input A total product curve shows the relationship between units of inputs and the total product or total output Marginal cost is the increase (change) in total cost resulting from production of one additional unit of output Marginal cost is the cost of the marginal unit of output Marginal cost and the average cost curve are U-shaped A firm’s marginal cost is defined as the addition cost of producing one more unit of output Where marginal cost is less than average cost, marginal cost may be rising, falling or constant Total fixed cost remains constant even if the firm shuts down
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