Cost Curves and Perfect Cmpetition

Cost Curves and Perfect Cmpetition - Main Concepts Profits...

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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))
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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.
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3 Short-Run Technology Constraint Law of Diminishing Returns: as a firm uses more of a variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually diminishes .
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This note was uploaded on 12/14/2010 for the course ECON 001 taught by Professor Stein during the Fall '07 term at UPenn.

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Cost Curves and Perfect Cmpetition - Main Concepts Profits...

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