costs of production and changes in supply. labor and output marginal product of labor- change in...
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![Page 1: Costs of Production and Changes in Supply. Labor and Output Marginal product of labor- change in output from hiring one more worker. Marginal product](https://reader036.vdocument.in/reader036/viewer/2022083006/56649f315503460f94c4d5c7/html5/thumbnails/1.jpg)
Costs of Production
and Changes in Supply
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Labor and Output
Marginal product of labor- change in output from hiring one more worker.
Increasing Marginal Returns- where workers add more to output than previous worker.
Diminishing Marginal Returns- point where adding more workers increases total output but at a decreasing rate.
Negative Marginal Returns- point where adding another worker DECREASES output.
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Costs
Fixed Cost- Cost that doesn’t change, no matter how much of a good is producedRent, machine repairs.
Variable Cost- Costs that rise or fall depending on the quantity produced. Raw materials, labor
TOTAL COST= Fixed costs + Variable costs
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You want to produce where Marginal Revenue=Marginal Cost.
Profit= total revenue-total cost.
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SHIFTS IN SUPPLY
Input costs
Government’s influence
Supply in Global Economy
Others
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Input Costs
CostsAs costs go up, supply shifts leftAs costs go down, supply shifts
right
TechnologyAdvances in technology, supply
shifts rightDecreases in technology, supply
shifts left
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Governments influence
Subsidy- government payment that supports a business or market.FARM SUBSIDIESIncrease- supply shifts rightDecrease- supply shifts left
Excise tax- tax on production or sale of a good.Increase costs- Like cigarettes,
alcohol.Increase- supply shifts leftDecrease- supply shifts right.
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Governments influence
Regulation- government intervention in a market that affects the price, quantity, or quality of a good. Increase in regulation- supply shifts leftDecrease in regulation- supply shifts
right.
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Supply in Global Economy
Import restrictions- Import restrictions- supply shifts
leftNone- Supply shifts right.
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Others!!
Future expectations of price- Expect higher prices in future-
current supply shift leftExpect lower prices in future-
current supply shifts right.
Number of suppliers-MORE- supply shifts rightLESS- supply shifts left.