-
7/21/2019 Costs Reveanue Profit
1/70
ReviewingProduction
1
-
7/21/2019 Costs Reveanue Profit
2/70
-
7/21/2019 Costs Reveanue Profit
3/70
Three Stages of Returns
Total
Product
Quantity of Labor
Marginal
and
Average
Product
Quantity of Labor
Total
Product
Stage II: $ecreasing Marginal Returns
MP %alling. TP increasing at a decreasing rate.
hy! %i&ed Resources. 'ach wor(er adds less and less.
Average Product
3Marginal Product
-
7/21/2019 Costs Reveanue Profit
4/70
Total
Product
Quantity of Labor
Marginal
and
Average
Product
Quantity of Labor
Total
Product
Stage III: )egative Marginal Returns
MP is negative. TP decreasing.
or(ers get in each others way
Marginal Product
Average Product
4
Three Stages of Returns
-
7/21/2019 Costs Reveanue Profit
5/70
The Law of $i*inishing Marginal Returns is )+T
the results of la#iness, it is the result of li*ited
fi&ed resources. 5
-
7/21/2019 Costs Reveanue Profit
6/70
- of or(ers
In"ut/
Total ProductTP/PI00AS
MarginalProductMP/
AverageProductAP/
1 1 2 2
3 31 31 314 45 35 34.5
6 75 41 35
7 81 35 35
5 91 31 37
8 95 5 34.5
9 95 1 31.93
91 25 .95
Identify the three stages of returns
6
-
7/21/2019 Costs Reveanue Profit
7/70
Accountants vs. 'cono*ists
Accounting
Profit
Total
Revenue Accounting Costs
(Explicit Only)
Accountants loo( at only ';PLI"ay? for
using their own resources'&a*"le: %orgone age, %orgone Rent,
Ti*e
Economic
Profit
Total
Revenue Economic Costs(Explicit + Implicit) 7
-
7/21/2019 Costs Reveanue Profit
8/70
Accountants vs. 'cono*ists
Accounting
Profit
Total
Revenue Accounting Costs
(Explicit Only)
Accountants loo( at only ';PLI"ay? for
using their own resources'&a*"le: %orgone age, %orgone Rent,
Ti*e
Economic
Profit
Total
RevenueEconomic Costs(Explicit + Implicit)
%ro* now on, all >costs?
are auto*atically
'
-
7/21/2019 Costs Reveanue Profit
9/70
Total
-
7/21/2019 Costs Reveanue Profit
10/70
%i&ed
-
7/21/2019 Costs Reveanue Profit
11/70
Total
-
7/21/2019 Costs Reveanue Profit
12/70
Quantity
Costs(olla
rs)
TC
Fixed Cost
!C
"C
-
7/21/2019 Costs Reveanue Profit
13/70
TP < %< T< M< A< A%< AT
