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27 Cards in this Set
- Front
- Back
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Profit max =
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Profit= (P*Q)-cost
Profit= Revenue-cost |
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MARGINAL PRODUCT OF LABOR
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MPL= CHG,Q/CHG,L
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AVERAGE PRODUCT OF LABOR
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APL=Q/L
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PRODUCTION W/ TWO VARIABLE INPUTS
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CAPITAL & LABOR (K&L)
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If MPL/PL > MPk/Pk
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THEN BUY MORE LABOR
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If MPL/PL < MPk/Pk
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THEN BUY MORE CAPITAL
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IF ALL OUT PUTS ARE DOUBLED WHAT HAPPENS TO OUT PUTS
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LESS THAN DOUBLE: DEC. RETURNS TO SCALE
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IF ALL OUT PUTS ARE DOUBLED WHAT HAPPENS TO OUT PUTS
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DOUBLES: CONSTANT RETURNS TO SCALE
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IF ALL OUT PUTS ARE DOUBLED WHAT HAPPENS TO OUT PUTS
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MORE THAN DOUBLES: INCREASING RETURNS TO SCALE
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SHORT RUN TOTAL COST
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TC= FC+VC
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SHORT RUN AVERAGE TOTAL COST
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ATC=ATC/Q
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SHORT RUN AVERAGE VARIABLE COST
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AVC=VC/Q
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SHORT RUN VARIABLE COST
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VC=W*L
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SHORT RUN FIXED COST
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FC=R*K
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SHORT RUN AVERAGE FIXED COST
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AFC= FC/Q
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MARGINAL COST
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MC=D(TC)/D(Q)
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TOTAL COST
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TC=FC+VC
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AVERAGE TOTAL COST
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ATC=AFC+AVC
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FIRM PROFIT MAX SET WHERE
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P=MC
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CMPETEIVE FIRM IN LONG RUN PROFIT MAX AT
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P=LRMC & P=LRAC
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SHORT RUN COST
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TC=TFC+TVC
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AVERAGE TOTAL COST
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ATC=TC/Q
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AVERAGE VARIALBE COST
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AVC=TVC/Q=W*L/Q=W/Q/L=W/APL
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AVERAGES: WHEN DIVIDED IN UNITS OF OUTPUT
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AS APL GOES UP AVC GOES DOWN
AS APL GOES DOWN AVC GOES UP |
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AVERAGE FIXED LABOR
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AFL=TFC/Q
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UTILITY MAX CONDITION
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(MUa/Pa)=(MUb/Pb)
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MARGINAL UTILITY
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MUa/Pa IS THE EXTRA UTILITY FROM $ EXTRA SPENT ON a
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