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Cost Chapter Short Summary Production function Relationship between inputs K L and output Q APL and MPL are hill shaped MPL eventually decreases due to the law the of diminishing marginal product AVC and MC are U shaped The U shaped cost curves are related to the hill shaped product curves The average follows the margin Cost Chapter Short Summary Short run at least one input usually K is fixed Long run all inputs variable but technology and resources are fixed Short run cost curves are U shaped because of diminishing marginal product Long run cost curve is U shaped because of economies of scale diseconomies of scale Minimum Efficient Scale MES is the least amount of output Q the firm has to make to get the minimum LRAC
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