PRODUCTION CHOICES AND COSTS: THE SHORT
RUN
1. Understand the terms associated with the short-run production function—total product, average product, and marginal product—and explain and illustrate how they are related to each other.
2. Explain the concepts of increasing, diminishing, and negative marginal returns and explain the law of diminishing marginal returns.
3. Understand the terms associated with costs in the short run—total variable cost, total fixed cost, total cost, average variable cost, average fixed cost, average total cost, and marginal cost—and explain and illustrate how they are related to each other.
4. Explain and illustrate how the product and cost curves are related to each other and to determine in what ranges on these curves marginal returns are increasing,diminishing, or negative.
