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.