Short run product curve

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Intros
Lessons
  1. Short Run Product Curve Overview:
  2. Short-Run Constraint
    • A short time period
    • Capital is fixed
    • Only labour, raw materials, etc. can be changed
    • Short-run decisions can easily change
    • Increasing output in the short-run
  3. 3 Product Curves
    • Total Product Curve
    • Marginal Product Curve
    • Average Product Curve
  4. Law of Diminishing Returns 
    • Features of Marginal & Average Product Curve
    • Increases at first, decreases later
    • Why?
  5. Maximizing Average Product
    • When MP > AP, you marginally gain more then average
    • When MP < AP, you marginally gain less than average
    • Maximized when AP = MP
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Examples
Lessons
  1. Deriving Marginal & Average Product Curve
    Consider the following information:

    Labor (workers per week)

    Output (candies per week)

    0

    0

    1

    15

    2

    35

    3

    60

    4

    80

    5

    95

    6

    105

    1. Draw the total product curve
    2. Calculate and draw the marginal product curve
    3. Calculate and draw the average product curve
  2. Consider the following information:

    Labor (workers per week)

    Output (candies per week)

    0

    0

    1

    10

    2

    30

    3

    60

    4

    80

    5

    90

    6

    95

    1. Draw the total product curve
    2. Calculate and draw the marginal product curve
    3. Calculate and draw the average product curve
  3. Analyzing Marginal & Average Product Curve
    Consider the following marginal product & average product curve.
    Marginal & average product curve
    1. Over what output range does the company have increased specialization and division of labor?
    2. Over what output range does the company's employees have less access to capital, and less space to work in?
    3. Over what output range does the company have diminishing marginal product and increasing average product?
    4. At what output is average product curve maximized?
  4. Consider the following marginal product & average product curve.
    Marginal & average product curve
    1. Over what output range does the company have increased specialization and division of labor?
    2. Over what output range does the company's employees have less access to capital, and less space to work in?
    3. Over what output range does the company have diminishing marginal product and increasing average product?
    4. At what output is average product curve maximized?