3.3 The nature of productivity and costs in the short run.
Total product: Is the total output produced by a firm’s workers.
Marginal product: Is the addition to total product after employing one more unit of factor input.
Marginal: In economics marginal always means ‘one more’.
Task specialization: Occurs when the various activities of a production are broken down into their separate components. Each worker then specializes in one particular task, becoming an expert in the task and raising overall productivity. (Theirs is only so much task specialization that can occur without leaving a worker without a full day’s work).
The law of diminishing returns: States that, as more of a variable factor of production, usually labour, is added to a fixed factor of production, usually capital, then at some point the returns to the variable factor will diminish.
Variable costs: Are costs associated with the use of variable factors of production, such as labour.
Fixed costs: Are associated with the employment of fixed factors of production, such as capital.
Total costs: Are simply fixed costs + variable costs.
Average total cost: Total cost/number of units produced.
Average variable cost: Total variable cost/number of units produced.
Average fixed cost: Total fixed cost/number of units produced.
Marginal cost: Is the cost of creating one more unit, Change in total cost/change in output.
Figuur 3.4
- Average variable and average total cost curves are always U-Shaped because of the law of diminishing returns.  
- Marginal cost curve always cuts through the minimum points of the average total and average variable costs. Whenever the marginal is lower than the average, the average will go down and whenever the marginal is higher than the average, the average will rise.
- The average fixed cost curve always falls down when output increases.
- Y-as is prijs.

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