Week8 - Principles of Microeconomics Econ 2005 Week 8...

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05/13/09 Econ 2005 1 Principles of Microeconomics Econ 2005 Week 8 Production and costs (ch 8)
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05/13/09 Econ 2005 2 Production and costs (chapter 8) In this chapter we learn about: The relationship between quantity of inputs and  quantity of output Why production is often subject to  diminishing       returns to inputs What the various forms of a firm’s costs are and  how they generate the firm’s  marginal  and  average cost curves Why a firm’s costs may differ in the  short run  versus the  long run How the firm’s technology of production can  generate  economies of scale
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05/13/09 Econ 2005 3 The Production Function production function  is the relationship between the  quantity of inputs a firm uses and the quantity of output it  produces. fixed input  is an input whose quantity is fixed and  cannot be varied. variable input  is an input whose quantity the firm can  vary.
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05/13/09 Econ 2005 4 Inputs and Output The  long run  is the time period in which  all inputs can be varied. The  short run  is the time period in which  at least one input is fixed. The 
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Week8 - Principles of Microeconomics Econ 2005 Week 8...

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