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Exam-2-Chapters

Exam-2-Chapters - Economics:Exam2,chapter8 15:24:00...

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Economics: Exam 2, chapter 8 05/12/2007 15:24:00 Behind the Supply Curve; Inputs and Cost     Production function:  The relationship between the quantity of inputs a firm uses  and the quantity of output it produces. Inputs and Output     Fixed Input:  Input whose quantity is fixed and can’t be varied. Variable Input:  An input whose quantity the firm can vary Long run:  The time period in which all inputs can be varied Short run:  The time period in which at least one input is fixed Total Product Curve:  Shows how the quantity of output depends on the quantity  of the variable input for a given quantity of the fixed input. Marginal Product:  Of an input is the additional quantity of output that is  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 quantity of all other inputs fixed, reduces that inputs marginal product. Fixed cost:  A cost that does not depend on the quantity of output produced. It is  the cost of the  fixed  input. Variable cost:  A cost that depends on the quantity of output produced.  It is the  cost of the variable input. Total cost:  Sum of the fixed cost and the variable cost of producing that quantity  of output. Total Cost curve:  Shows how total cost depends on the quantity of output.
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At a certain point in time, more workers then deemed necessary can actually   have a negative marginal product. Marginal Cost and Average Cost     Marginal Cost Change in total cost generated by producing one more unit of output MC =  Δ TC/ Δ Q =  Δ TC generated by one additional unit of output.
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