Productivity Curves Total Product, Marginal Product and Average Product Draw & Label: Total Product Curve (TP) Quantity/ 2nd Graph: Output Marginal Product (MP) Average Product (AP) TOTAL PRODUCT Label where the Law of Diminishing Returns set: In. **Connect the points that are connected on the Total Product and Marginal curves. Label them: Increasing Returns, Diminishing Returns, Negative Returns Concepts Number of TP increases at an increasing rate (MP Quantity/ Workers increasing), increases at a decreasing rate (MP decreasing), and then finally Output decreases (MP negative). MARGINAL/ MP increases at first due to specialization a: AVERAGE workers are added, but then as more PRODUCT workers are added, the marginal product per worker begins to diminish. MP crosses through AP maximum point . AP increases when MP is greater than it, and decreases when MP is less The Law of Diminishing Marginal Returns: Number of Theory of the Firm Workers Short Run Cost Graphs inev tinu at a YOW TOTAL COST CURVES Draw & Label: AVERAGE COST CURVES Axes (Costs & Q), TC, TFC, TVC Draw & Label: Axes (Costs & Q), ATC, AFC, AVC. Shade *Long Run Cost Graph (LRATC) in a box for TFC. Label: Economies of Scale Constant Returns to Scale Diseconomies of Scale Minimum Efficient Scale (MES) Why do Economies of Scale Occur?_*Perfectly Competitive Product Market Structure Draw and label a perfectly competitive firm and market in Long run equilibrium Industry Graph: Axes, supply, demand, equilibrium Pm & Qm Firm Graph: Axes, MR=D=AR=P, ATC, MC, equilibrium Pf & Q FIRM INDUSTRY/MARKET 5 Scenarios for a FIRM: MR=MC= P >ATC MR=MC= P = min. ATC (Long-Run Eq. in PC) AVC P>AVC at MR=MC output Label: Axes, D, MR, MC, ATC, P&Q, Shade Losses