Marginal Cost & Analysis

Notes by Rudy

· Short run- small amount of time in which only one input can be changed.
· Long run- long period of time when multiple input variables can be changed.
· Total product- how many products are made.
· Total cost- sum of fixed and variable costs, or how much is the cost of production.
· Marginal product- the change in output that results from adding one more input.
· Marginal cost- the change in cost that results from producing one more unit of output.
· Break-even point- when total cost equals total revenue.
· Stages of Production
o Increasing marginal returns- marginal product increases. Has a big, positive slope.
o Decreasing marginal returns- marginal product decreases. Has a smaller, positive slope.
o Negative marginal returns- marginal product is negative. Has a negative slope.