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Unformatted text preview: Kimberly Zhang Chapter 6 Technically efficient on f(L, K) curve Increasing marginal returns to labor (concave up): region along total product function where output rises with additional labor at an increasing rate Diminishing marginal returns to labor (concave down, positive slope): region along total product function where output rises with additional labor but at a decreasing rate o MP L begins to decrease Diminishing total returns to labor (concave down, negative slope): region along product function where output decreases with additional labor Average product of labor (AP L = Q/L): the average amount of output per unit of labor o Slope of ray from origin to total product curve at that point Marginal product of labor (MP L = Q/ L): rate at which total output changes as quantity of labor the firm uses changes o Equals slope of total product curve at that point o AP L = MP L when AP L is at maximum Law of diminishing marginal returns: as usage of one input increase, quantities of other input held...
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This note was uploaded on 09/13/2009 for the course 220 203 taught by Professor Sheflin during the Spring '09 term at Rutgers.
- Spring '09