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A family of isoquants can be represented by an isoquant map, a graph combining a number of isoquants, each representing a different quantity of output.An isoquant map can indicate decreasing or increasing returns to scale based on increasing or decreasing distances between the isoquant pairs of fixed output increment, as output increases. [7]
Figure 2 [OLD]: Total Output vs. Total Input [top] & Output per unit Input vs. Total Input [bottom] Seen in TOP, the change in output by increasing output from L 1 to L 2 is equal to the change from L 2 to L 3. Seen in BOTTOM, until an output of L 1, the output per unit is increasing. After L 1, the output per unit decreases to zero at L 3.
If output increases by the same proportional change as all inputs change then there are constant returns to scale (CRS). For example, when inputs (labor and capital) increase by 100%, output increases by 100%. If output increases by less than the proportional change in all inputs, there are decreasing returns to scale (DRS). For example, when ...
The total cost curve, if non-linear, can represent increasing and diminishing marginal returns.. The short-run total cost (SRTC) and long-run total cost (LRTC) curves are increasing in the quantity of output produced because producing more output requires more labor usage in both the short and long runs, and because in the long run producing more output involves using more of the physical ...
Average fixed cost is the fixed cost per unit of output. As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output. Average variable cost plus average fixed cost equals average total cost:
The marginal product of a factor of production is the change in output when that factor of production changes, holding constant all the other factors of production as well as the total factor productivity. The marginal product of capital, corresponds to the first derivative of the production function with respect to capital:
The work done when a force of one newton moves the point of its application a distance of one metre in the direction of the force. [32] = 1 J = 1 m⋅N = 1 kg⋅m 2 /s 2 = 1 C⋅V = 1 W⋅s kilocalorie; large calorie: kcal; Cal ≡ 1000 cal IT = 4.1868 × 10 3 J: kilowatt-hour; Board of Trade Unit: kW⋅h; B.O.T.U. ≡ 1 kW × 1 h = 3.6 × 10 6 J
Because the output per unit of the variable input is improving throughout stage 1, a price-taking firm will always operate beyond this stage. In Stage 2, output increases at a decreasing rate, and the average and marginal physical product both decline. However, the average product of fixed inputs (not shown) is still rising, because output is ...