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  • Microeconomics U3 Notes

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    willjyw0201
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    1) The law of diminishing returns states that when adding additional variable inputs to a fixed input, the marginal output will increase at a diminishing rate. 2) In the long run, all costs are variable and plant capacity can be altered. There are returns to scale based on how output changes relative to inputs. 3) Economies of scale occur when long run average total cost decreases as output increases, due to spreading fixed costs over more units of output. Diseconomies of scale occur when long run average total cost increases as output increases.

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    1) The law of diminishing returns states that when adding additional variable inputs to a fixed input, the marginal output will increase at a diminishing rate. 2) In the long run, all costs are variable and plant capacity can be altered. There are returns to scale based on how output changes relative to inputs. 3) Economies of scale occur when long run average total cost decreases as output increases, due to spreading fixed costs over more units of output. Diseconomies of scale occur when long run average total cost increases as output increases.

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    3 views8 pages

    Microeconomics U3 Notes

    Uploaded by

    willjyw0201
    1) The law of diminishing returns states that when adding additional variable inputs to a fixed input, the marginal output will increase at a diminishing rate. 2) In the long run, all costs are variable and plant capacity can be altered. There are returns to scale based on how output changes relative to inputs. 3) Economies of scale occur when long run average total cost decreases as output increases, due to spreading fixed costs over more units of output. Diseconomies of scale occur when long run average total cost increases as output increases.

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    of 8

    Law Returns

    Module 56
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    when add variable value
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