Microeconomics,, 16th Canadian Edition

to be met with the existing stock of capital for only a brief time, after which it can be adjusted to the level made desirable b ...

In the case of the call centre, a long-run change might be the replacement of the firm’s existing telephone exchange with a bett ...

Figure 7-1 Total, Average, and Marginal Products in the Short Run 7.3 Production in the Short Run Consider a company in Regina t ...

The relation of output to changes in the quantity of the variable factor (labour) can be looked at in three different ways. As t ...

decreasing rate. This causes both the average and the marginal product curves in part (ii) to rise at first and then decline. Wh ...

Marginal product (MP) is the change in total product resulting from the use of one additional unit of the variable factor. [ 13 ...

one another. We now turn to examining two aspects of this relationship. ...

Marginal Revenue Product The variations in output that result from applying more or less of a variable factor to a given quantit ...

space and machinery. If there is only one worker, that worker must do all the tasks, shifting from one to another and becoming c ...

Applying Economic Concepts 7-2 Three Examples of Diminishing Returns Sport Fishing British Columbia’s Campbell River, a noted sp ...

Portfolio Diversification Investors in the stock market typically like to reduce the risk of their portfolios. This risk—typical ...

The Average–Marginal Relationship We have so far examined the concept of diminishing marginal returns; but average returns are a ...

the marginal is less than the average, the average must be falling. For example, if you had a 3.6 cumulative grade point average ...

7.4 Costs in the Short Run We now shift our attention from production to costs. The majority of firms cannot influence the price ...

total variable cost. Total Fixed Cost (TFC) Total fixed cost is the cost of the fixed factor(s). This does not vary with the lev ...

Average Fixed Cost (AFC) Total fixed cost divided by the number of units of output tells us the average fixed cost per unit of o ...

Table7-2 Short-Run Costs: Fixed Capital and Variable Labour Short-Run Cost Curves Using the firm’s production relationships from ...

Columns 4 through 6 in Table 7-2 show the firm’s total costs. TFC is simply $10 per unit of capital times 10 units of capital. T ...

Figure 7-2 Total, Average, and Marginal Cost Curves L rises from 4 to 5), total costs rise from $180 to $200. Thus, marginal cos ...

These curves are plotted from the data in Table 7-2. In part (i), total fixed cost does not vary with output. Total variable cos ...