Micro 4.4

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What may costs be influenced by in the short run?
The law of diminishing returns.
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What does the law of diminishing returns mean?
When additional units of variable factors of production are added to a fixed factor, marginal output or product will eventually decrease.
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How does the law of diminishing returns initially work in a kitchen?
when additional chefs are employed in a busy kitchen, as increasing numbers of customer orders come in, the first few workers are likely to contribute increasing returns in the form of increased productivity as they work together as a team.
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What do these chefs benefit from?
Increased specialisation and division of labour, and little time is lost from chefs moving between different types of tasks.
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How does the law of diminishing returns work as it gets busier?
They may get in each other’s way, leading to reduced productivity and more mistakes.
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How does the law of diminishing returns affect an extra chef?
The addition of each chef adds less to total product than previous chefs and marginal product diminishes.
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Other cards in this set

Card 2

Front

What does the law of diminishing returns mean?

Back

When additional units of variable factors of production are added to a fixed factor, marginal output or product will eventually decrease.

Card 3

Front

How does the law of diminishing returns initially work in a kitchen?

Back

Preview of the front of card 3

Card 4

Front

What do these chefs benefit from?

Back

Preview of the front of card 4

Card 5

Front

How does the law of diminishing returns work as it gets busier?

Back

Preview of the front of card 5
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