EC4101 Week 09 Lecture 1 PDF
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University of Limerick
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Summary
This Economics lecture notes covers production economics concepts like production function, fixed and variable inputs, total product curve, marginal product, technical efficiency, and cost analysis. It includes the law of diminishing marginal returns and relevant formulas. The lecture material is based on EC4101 lecture slides and textbook "Economics" (12th Ed.) by David Begg.
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EC4101 Wk.09 Lec.01 Production: The conversion of inputs (labour, capital, etc) into outputs. Production Function: The relationship between the quantity of inputs a firm uses and the quantity of outputs it produces. Fixed Input: An input where its quantity is fixed for a period of time and can’t...
EC4101 Wk.09 Lec.01 Production: The conversion of inputs (labour, capital, etc) into outputs. Production Function: The relationship between the quantity of inputs a firm uses and the quantity of outputs it produces. Fixed Input: An input where its quantity is fixed for a period of time and can’t be varied. A Variable Input: An input where the firm can vary its quantity at any time. Long Run: The period in which all inputs can be varied. Short Run: The period in which at least one input is fixed. Total Product Curve: Shows how the quantity of output depends on the quantity of the variable input for a given quantity of the fixed output. Marginal Product: The change in output resulting from a one-unit increase in the amount of labour output. It initially rises as employees are hired, then it declines. Technical Efficiency: Exists if there is no other way to make a given output using less of one input and no more of the other inputs. Fixed Costs: A cost independent of output. The cost of the fixed input. Variable Costs: A cost dependent on output. The cost of the variable input. Total Cost (at a given quantity) = Fixed + Variable Costs As more output is produces, the total costs curve gets steeper as a result of diminishing returns. Law of Diminishing Marginal Returns: Further increases in a variable input lead to steadily decreasing marginal product of that input. Marginal Cost: The change in total costs generated by one additional unit of output. Marginal Cost = Change in Total Costs/Output Quantity Marginal Total Costs = Marginal Variable Costs Average Output/Marginal Productivity: Output produced divided by the amount of the variable factor employed. Marginal Product: The change in the total outputs generated by one additional unit of input. Marginal Product = Change in Total Product/Change in Input References: Notes based on EC4101 Lecture Slides and the relevant readings from Economics (12th Ed.) David Begg. Image 1: www.researchgate.net
