ProductionRelationshipsAddition

ProductionRelationshipsAddition - 1. L AP w AVC = Proof: L...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
The following two relationships link the discussion of costs with the discussion of production. Both relationships hold in a situation where the only variable input to production is labor, and the labor market is competitive (for now this will always hold). Both are frequently used in past exams and thus are good to know.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1. L AP w AVC = Proof: L AP w Q wL Q VC AVC = = = 2 . L MP w MC = Proof: L MP w Q L w Q wL Q VC Q VC FC Q TC MC = = = + = + = = ) ( ) ( * Courtesy of Brian Kovak...
View Full Document

Ask a homework question - tutors are online