Production And Cost In The Firm
Production and Cost in the Firm
The production and cost in the firm deals strongly with the supply side of the market. Firms produce goods and services by combining various resource inputs and then selling the finished goods to consumers or other firms. Production involves technical processes and physical relationships; for example, steel is produced by using iron ore, coal, and other materials. Costs are related to production because all resources have opportunity costs. The costs of production are then related to supply curves. This analysis applies not to just one but all firms. My next couple paragraphs will be a totally break down of the Production and Cost in the Firm.
Average product of labor( APl) = Q / L
With increasing marginal returns (produced), total product is increasing at an increasing rate When marginal product is decreasing but is still positive, total product is increasing at decreasing rate. When marginal product equals 0, total product is at a maximum. When marginal product is negative, total product is falling.
To be comfortable with the above relationships picture a graph by using the data in the table. Opportunity cost is the foregone income that the owner of a resource could have made
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