CH 10 econ

CH 10 econ - variable input with a given quantity of fixed...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Main Concepts ± Profits ± The firm’s input and output in the short run ± The firm’s short-run supply curve ± Pricing in the long run The Goal: Maximum Profit! The firm objective: profit maximization . Profits=Revenue-Cost=P*Q(P)-TC(Q(P))
Background image of page 1

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

View Full DocumentRight Arrow Icon
2 Decision Time Frames Short run: the quantity of one or more resources used is fixed. Long run: the quantities of all resources can be varied. Short-Run Technology Constraint Total product: total output produced in a given period. Marginal product (of labor): the change in total product that results from a one-unit increase in the quantity of labor employed, with all other inputs remaining the same. Average product: total product divided by the quantity of labor.
Background image of page 2
3 Short-Run Technology Constraint Law of Diminishing Returns: as a firm uses more of a
Background image of page 3

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

View Full DocumentRight Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes . Short-Run Cost Total Cost A firm’s total cost (TC): the cost of all resources used. Total fixed cost (TFC): the cost of the firm’s fixed inputs. Total variable cost (TVC): the cost of the firm’s variable inputs. TC(Q) = TFC + TVC(Q) 4 Short-Run Cost Marginal Cost Marginal cost (MC): the increase in total cost that results from a one-unit increase in total product. Average fixed cost (AFC): total fixed cost per unit of output. Average variable cost (AVC): total variable cost per unit of output. Average total cost (ATC): total cost per unit of output. ATC(Q) = AFC(Q) + AVC(Q)...
View Full Document

This note was uploaded on 11/05/2009 for the course BIO econ 001 taught by Professor Stein during the Spring '09 term at UPenn.

Page1 / 4

CH 10 econ - variable input with a given quantity of fixed...

This preview shows document pages 1 - 4. Sign up to view the full document.

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