Chapter23

Chapter23 - 9/19/2007 ATC Total qaa returns qq Output...

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Average Total Cost (dollars) $ Economies of scale Diseconomies of scale Constant returns to scale ATC min q q a q a Quantity of Output Output levels with constant average and marginal costs 9/19/2007 E CONOMICS 101 C HAPTER 23 I) Production Functions definition: summarize relationships between combinations of inputs and the maximum outputs that each combination can produce ex: outputs = f(inputs) commonly written as: - q = f(K,L) (i) q = output (ii) K = capital services (iii) L = labor services used per production period II) Production in the Short Run average physical product of labor (APP L ) - equals total output divided by labor (q/L) marginal physical product of labor (MPP L ) - the additional output produced by an additional unit of labor, computed by dividing the change in total output ( q) by the change in labor ( L): q/ L total product curve - the technical relationship that exists between production and various levels of one input, assuming that other resources are held constant
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Chapter23 - 9/19/2007 ATC Total qaa returns qq Output...

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