Chapter 11: The production Function
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.
total cost curve
shows how total cost depends on the quantity of output.
Marginal Product of Labour (MPL) equation
MPL= ΔQ/ΔL (rise over run)
relationship among fixed cost, variable cost, and total cost as an equation
Total cost= Fixed cost+ Variable cost TC=FC+VC
variable cost
is a cost that depends on the quantity of output produced. It is the cost of the variable input.
fixed cost
is a cost that does not depend on the quantity of output produced. It is the cost of the fixed input.
fixed input
is an input whose quantity is fixed for a period of time and cannot be varied.
variable input
is an input whose quantity the firm can vary at any time.
production function
is the relationship between the quantity of inputs a firm uses and the quantity of output it produces.
long run
is the time period in which all inputs can be varied.
short run
is the time period in which at least one input is fixed.
marginal product
of an input is the additional quantity of output that is produced by using one more unit of that input.
total cost
of producing a given quantity of output is the sum of the fixed cost and the variable cost of producing that quantity of output.