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P MC PMC ATC ATCp1 AUC P1 AUC MRq1 q q1 MR1 D1Perfect Competition MonopolyMC = marginal cost curveWhy does the next employee provide more work than the last employee? Specialization and division oflabor. Think about assembly line. However, too many workers get in each other's way.Q (total product) Total costLabor Output (product)Total product function Total cost functionMarginal 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 ACOutput QThe 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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