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P p1 MC P ATC AUC MR P1 MC ATC AUC q1 q Perfect Competition MC marginal cost curve q1 MR1 D1 Monopoly Why does the next employee provide more work than the last employee Specialization and division of labor Think about assembly line However too many workers get in each other s way Q total product Total cost Total product function Total cost function Labor Output product Marginal cost The added cost of one more unit of output Why is the marginal cost curve downward sloping The marginal product of labor is increasing Each worker is more productive than the last Make a rounded checkmark to get a perfect marginal cost curve Small tail Costs MC AC Output Q The marginal cost curve and the average cost curve always intersect at the lowest point on the average cost curve Example Wherever your GPA goes it will follow the average GPA


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NU ECON 1116 - Lecture notes

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