1.Productivity 2.Costs of Production Amount of goods and services produced per unit of input How...

1.Productivity2.Costs of

Production

•Amount of goods and services produced per unit of input•How efficiently their resources are being used in production

•TOTAL PRODUCT - product a company makes in a given time period, with given amount of input•Also called Total output

•Marginal Product – Change in output by adding one more unit of input•Product Schedule (87)

•What does changing level of input have on total and marginal product

•Add (one) input productivity increases to a point

•Eventually, it will result in negative marginal product

•Workers, machines. Ect.

1.Increasing Marginal Returns

2.Diminishing Marginal Returns

3.Negative Marginal Returns

•Add worker = Total product levels increase

•At some point, adding more workers decreases marginal product•Page 87

•At certain amount of labor input the total product goes down

•Fixed Costs•Variable Costs•Total Costs•Marginal Costs

•Fixed Cost – Production cost does not change as level of output changes•Rent•Wear and Tear on Machines

•Variable Costs – cost change as level of output changes•More ducks = more workers (91)

•Total Costs – Fixed costs plus variable costs

•Marginal Costs – additional costs of producing one more unit of output