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Unformatted text preview: Econ 101: Principles of Microeconomics Fall 2009 Discussion Section #6 Handout Concepts Review Production function: describes how various kinds of inputs can be combined to produce one or more products. Marginal product of an input: the additional quantity of output produced by using one more unit of that input. Diminishing returns to an input : when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input. When MP&gt;AP , AP rises. When MP&lt;AP , AP falls. When MP=AP , AP is at its maximum. 1. Short run is the time interval in which the quantities of some resources are fixed. Long run is the time interval in which the quantities of all resources can be varied. 2. Marginal and Total Cost TC=TFC+TVC ATC=AFC+AVC change in total cost change in quantity of output TC MC Q = = MC must cut through the ATC at the minimum of ATC MC must cut through the AVC at the minimum of AVC....
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This note was uploaded on 11/27/2011 for the course ECONOMICS 101 taught by Professor Kelly during the Fall '10 term at Wisconsin.
- Fall '10