Producer Theory - Producer Theory Review: By no means is...

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Producer Theory Review: By no means is this all inclusive. Important things to know: Marginal Cost q TC Marginal revenue is the same idea. Average Cost q TC Marginal Product of Labor L L K f ) , ( , L f Marginal product of capital is of course the same. Average Product of Labor L L K f ) , ( , L q Marginal Revenue Product of Labor L TR , p f L Equals p f L only when price takers in output market. Marginal Expense of Labor L TC , w Equals w only when price takers in input market. General Elasticity Equation x y y x E y x = , You can let x and y be just about anything! RTS K L K L MP MP RTS = , RTS is ALWAYS positive. Some Guiding Principals: 1) The producer is able to control 3 things: quantity produced, labor and capital. These are, therefore, determined in the system and it is our job to figure out what they are. 2) There are several endogenous parameters, which are given to us: rental rate of capital (v), wage (w), and output price (p). These can be fixed or squirmy.
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Producer Theory - Producer Theory Review: By no means is...

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