Summary
Microeconomics 1 Summary
- Course
- Institution
- Book
Summary of everything covered in week 3 including lectures, knowledge clips and textbook
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Summary Microeconomics
-
ECS2601 BMZ ASSESSMENT 4 SEMESTER 2 2024 MASTER In a perfectly competitive industry, the amount of output that a rm decides to sell has no effect on the market price, because… a. the rm’s output...
-
ECS3708 ASSESSMENT 2 SEMESTER 1 2024
Seller
Follow
taliareddy
Content preview
⚙Week 3: Production (CH 6)
Created @October 30, 2022 5:19 PM
Type Study notes
Questions
Reviewed
The production decisions of a firm
Why do firms exist?
They allow goods and services to be produced far more efficiently than would be
possible without them
What is the production production process?
The process of turning inputs into outputs
What are the factors of production?
Labour, capital and materials
The production function
What is production function?
Function showing the highest output a firm can produce for every specified
combination of inputs
What is the equation of the production function?
Week 3: Production (CH 6) 1
, q = F (K,L)
What does the above equation apply to?
Applies to a given technology
What do production functions describe?
What is technically feasible when the firm operates efficiently
What is a reasonable assumption of profit seeking firms?
That they will not waste resources and therefore be technically efficient
The Short Run versus the Long Run
What does the short run refer to?
Period of time in which quantities of one or more production factors cannot be
changed
What does the long run refer to?
Amount of time needed to make all production inputs variable
Which inputs are fixed and which inputs are variable in the short term?
Usually capital is fixed and labour is variable
Production with one variable input (Labor)
How does a firm decide how much of a particular input to buy?
They compare the benefit that will result with the cost of that input
Average and Marginal Products
What is the average product and what is the formula?
Week 3: Production (CH 6) 2
, Output per unit of a particular input
Q/L
What is the marginal product and what is the formula?
Additional output produced as an input is increases by one unit.
What is the marginal product of labour?
Change in q/ change in labour
What does MPL depend on?
Depends on the amount of capital used as additional workers are more likely to be
productive if they have more capital to use
Formula for average product of labour?
Q/L
Formula for MPL
Change in q/ change in labour
The Slopes of the Product Curve
Till when is the marginal product positive and when does it become negative?
Till it reaches maximum output and it becomes negative when output is decreasing
When is marginal product above average product?
When the average product is increasing
When is marginal product below average product?
when the average product is decreasing
What does this mean for average product when it reaches its maximum?
Marginal product = Average Product
The Average Product of Labour Curve
Week 3: Production (CH 6) 3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller taliareddy. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.80. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62491 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now