While the managers of the restaurant are making choices concerning its operation over the next year, they are also planning for longer periods. factors such as labor and food are examples. A factor of production whose quantity can be changed during a particular period is called a variable factor of production A factor of production whose quantity can be changed during a particular period. For the restaurant, its building is a fixed factor of production for at least a year. When the quantity of a factor of production cannot be changed during a particular period, it is called a fixed factor of production A factor of production whose quantity cannot be changed during a particular period. Other factors of production could be changed during the year, but the size of the building must be regarded as a constant. Decisions concerning the operation of the restaurant during the next year must assume the building will remain unchanged. It would take at least that much time to find a new building or to expand or reduce the size of its present facility. For example, a restaurant may regard its building as a fixed factor over a period of at least the next year. in this microeconomic context is a planning period over which the managers of a firm must consider one or more of their factors of production as fixed in quantity. The short run A planning period over which the managers of a firm must consider one or more of their factors of production as fixed in quantity. Our analysis of production and cost begins with a period economists call the short run. Explain and illustrate how the product and cost curves are related to each other and to determine in what ranges on these curves marginal returns are increasing, diminishing, or negative.Understand the terms associated with costs in the short run-total variable cost, total fixed cost, total cost, average variable cost, average fixed cost, average total cost, and marginal cost-and explain and illustrate how they are related to each other.
Explain the concepts of increasing, diminishing, and negative marginal returns and explain the law of diminishing marginal returns.Understand the terms associated with the short-run production function-total product, average product, and marginal product-and explain and illustrate how they are related to each other.
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