2.  When you study for an exam for happens to the marginal benefit as you spend more time studying?  Is the 4 th hour of studying more valuable than the 8 th hour of studying.

3.  Profit = Revenue – Cost  Profit = Revenue – (Fixed Cost + Variable Cost)  Profit-How much money you make  Revenue-How much money you bring in  Cost-How much money you spend

4.  The more productive a firm is, the lower will be it’s cost of production.  This allows the firm to be more competitive with other firms in the market as their profit increases.

5.  Short Run-A key factor of production (usually capital) is fixed in quantity.  Long Run-All factors of production are variable

6. Total PointsAverage Points per hour Marginal points per hour 0000 140 2603020 3752515 484219 590186 68414-6

7.  Complete the activities and sketch the graphs  If total output increases then marginal product is positive  If total output decreases then marginal product is negative  If total output is at its maximum then marginal product is zero  If marginal product is greater than average product the average product will increase  If marginal product is less than average product the average product will decrease  If marginal product is equal to average product the average product is at it’s maximum.  GPA Example

8.  Marginal Cost-The cost of producing one more  Average Variable Cost-The total variable cost divided by the number produce

9.  Relationship between productivity curves and cost curves  If Marginal Product increases, the MC decreases  If MP increases, the MC decreases  If MP is maximized, the MC is minimized.

10.  Economies of Scale-  cost advantages that firms obtain due to size, output, or scale of operation, with cost per unit decreasing as fixed costs are spread out over more units of output.  Diseconomies of Scale- . Rather than experiencing continued decreasing costs per increase in output, firms see an increase in marginal cost when output is increased.

11.  LRATC is created from a series of short-run average total cost curves.