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# lec16 - Case III General shape of MPPL Output unit of L...

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2010-04-07 1 Cost Function Case III : General shape of MPP L Output/ unit of L Output Total output MPP L Where is output per worker maximized? Marginal product maximized L Cost (\$) output L VC \$/unit of output output Where is MC minimized? MC Average variable cost minimized Average and Variable Cost Cost (\$) VC Slope = Where is AVC minimized? Where is output per worker maximized? What is MC at Q 1 , Q 2 , Q 3 ? Q Q 1 AVC(Q 1 ) Q 2 Slope = AVC(Q 2 ) Q 3 Slope = AVC(Q 3 ) Note relation between MC and AVC Where is MC minimized? Average and Marginal Cost \$/unit of output Where is output per worker maximized? Where is MC minimized? Q Q 1 Q 2 Q 3 AVC MC MC=AVC at minimum AVC d(AVC)/dQ = 0 at minimum AVC Long-Run Total Costs Both capital and labor variable in long run Consider factor costs of both inputs Short-Run Production: Only one input is variable K A 3 D C B Marginal Physical Product of Labor MPP L : Change in output from 1 more unit of Labor.

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lec16 - Case III General shape of MPPL Output unit of L...

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