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Unformatted text preview: or treatments that have very little chance for success (mp=low) h. Exmp: Battleships vs. Submarines i. In WWII, Subs were responsible for sinking 90% of all vessels 1. Why would we want battleships? a. Confusing the notions of average product vs. marginal product i. Marginal Product and Marginal Cost i. Inversely Related ii. Before we saw MC increase b/c 1. First use most efficient inputs (i.e. low cost) 2. Use least conducive to production last iii. Now, MC curves can be viewed as upward sloping because of diminishing marginal product (DMP) j. Other types of cost to be aware of i. Fixed Cost ii. Variable Cost iii. Average Fixed Cost 1. AFC= FC/Q iv. Average Variable Cost 1. AVC= VC/Q v. Total Cost 1. TC= Fixed Cost (TC) + Variable Cost (VC) vi. Average Total Cost 1. ATC=AC=TC/Q 2. ATC= AFC + AVC...
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This note was uploaded on 04/07/2008 for the course ECO 2302 taught by Professor Smith during the Spring '08 term at University of Texas at Dallas, Richardson.
- Spring '08