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MARGINAL COST AND MARGINAL PRODUCT: Because variable cost is largely associated with the cost of employing a variable input in the short run, it's possible to identify a connection between the marginal cost curve and the marginal product curve. In particular, the quantity of output in which marginal cost is at a minimum, is the same quantity of output produced by the variable input when the marginal product of the variable input is at a maximum. In addition, over the range of production in which the variable input experiences increasing marginal returns and marginal product increases, the marginal cost curve declines. And over the range of production in which the variable input experiences decreasing marginal returns brought on by the law of diminishing marginal returns and marginal product increases, the marginal cost curve is rising.
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Lesson 19: Money Creation | Unit 3: Modern Banking
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Page: 11 of 23
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Suppose you find a $100 bill that you deposit in Amos National Bank.- Amos National adds $100 of vault cash, or reserves, to its assets, and $100 to its liabilities, your account.
- Some of these reserves are required ($10) and some are excess ($90), which can be used for a loan.
- Amos National Bank adds $90 to the customer's checking account, so the customer can buy new tires.
Two changes:- Amos National has a $90 loan balanced by a $90 checkable deposit.
- Amos National Bank just created $90 of money.
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AVERAGE FACTOR COST, PERFECT COMPETITION Total factor cost per unit of factor input employed by a perfectly competitive firm in the production of output, found by dividing total factor cost by the quantity of factor input. Average factor cost, abbreviated AFC, is generally equal to the factor price. However, using the longer term average factor cost makes it easier to see the connection to related terms, including total factor cost and marginal factor cost.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time searching for rummage sales looking to buy either a birthday greeting card for your grandfather or a weathervane with a cow on top. Be on the lookout for gnomes hiding in cypress trees.
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This isn't me! What am I?
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In 1914, Ford paid workers who were age 22 or older $5 per day -- double the average wage offered by other car factories.
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"Laughter is the shortest distance between two people. " -- Victor Borge, musician, humorist
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TP
Total Product
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