10/23 notes Flashcards
Q for theory of the firm =
firm inputs
Q=F(K(capital), L (Labor))
fixed inputs variable
K
variable inputs variable
L
total production of labor =
L
average production labor =
Q/L
marginal production of labor =
change in Q divided by change in L
diminishing marginal productivity of labor
there comes a point when an additional factor of production results in a lessening of output or impact
marginal product of labor
companys increase in total production when one additional unit of labor is added (in most cases add one mployee) and all other factors of production remain constant
short run total cost=
FC (fixed cost) + VC (variable cost)
total cost =
VC
scale means
size
constant returns to scale
occurs when the long run average between a companys inputs and outputs are proportional to each other
increasing returns to scale means
when the output is greater than the increase in input
according to the law of diminishing marginal utility as consumption of a particular good increases
marginal utility decreases
what do most ppl think long run is like
constant returns to scale
what does the income effect cause
QD to increase when the price of a normal good decreases and causes QD to decrease when price of inferior good decreases
what happens when network externalities are present
usefulness of a product increases with the number of consumers who use it
what happens when consumption of a product is path dependent
the cost if switching to a product with better tech gives the product with initial tech an advantage
