When you study for an exam for happens to the marginal benefit as you spend more time studying? Is the 4 th hour of studying more valuable than the 8 th hour of studying.
Profit = Revenue – Cost Profit = Revenue – (Fixed Cost + Variable Cost) Profit-How much money you make Revenue-How much money you bring in Cost-How much money you spend
The more productive a firm is, the lower will be it’s cost of production. This allows the firm to be more competitive with other firms in the market as their profit increases.
Short Run-A key factor of production (usually capital) is fixed in quantity. Long Run-All factors of production are variable
Total PointsAverage Points per hour Marginal points per hour
Complete the activities and sketch the graphs If total output increases then marginal product is positive If total output decreases then marginal product is negative If total output is at its maximum then marginal product is zero If marginal product is greater than average product the average product will increase If marginal product is less than average product the average product will decrease If marginal product is equal to average product the average product is at it’s maximum. GPA Example
Marginal Cost-The cost of producing one more Average Variable Cost-The total variable cost divided by the number produce
Relationship between productivity curves and cost curves If Marginal Product increases, the MC decreases If MP increases, the MC decreases If MP is maximized, the MC is minimized.
Economies of Scale- cost advantages that firms obtain due to size, output, or scale of operation, with cost per unit decreasing as fixed costs are spread out over more units of output. Diseconomies of Scale- . Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.
LRATC is created from a series of short-run average total cost curves.