Test 3 Notes - C hapter 10 Output and Costs Short Run...

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Chapter 10 – Output and Costs Short Run : capital fixed, labor variable Long Run : capital and labor are variable Total Product : the maximum output that a given quantity of labor can produce Marginal Product : the increase in total product that results from a one-unit increase in the quantity of labor employed Average Product : equal to total product divided by the quantity of labor employed Law of Diminishing Returns : each additional worker produces a successively smaller addition to output Total Cost : the cost of all the factors of production a firm uses Total Fixed Cost : the cost of the firm’s fixed factors (does not change with output) Total Variable Cost : the cost of the firm’s variable factors (changes with output) Marginal Cost : the increase in total cost that results from a one-unit increase in output Average Fixed Cost : total fixed cost per unit of output Average Variable Cost : total variable cost per unit of output Average Total Cost : total cost per unit of output
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Chapter 11 – Perfect Competition Perfect Competition Many firms sell identical products to many buyers No barriers of entry Established firms have no advantage over new ones Sellers and buyers are well informed about prices
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Test 3 Notes - C hapter 10 Output and Costs Short Run...

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