Explain the law of diminishing marginal productivity.
In your own words, explain the law of diminishing marginal productivity. Be sure to mention why the law tends to hold in the short run.
Based on your readings this week, in your opinion which factors impact the supply curve for physicians the most? In your own words, explain how each factor impacts the supply curve.
Requirements: 1 page
Short-run Cost Curve
Cost theory relates the quantity of output to the cost of production. As such, it identifies how total costs respond to changes in output. Short-run total costs of production are dependent on the quantities and prices of inputs employed. There is a reciprocal relationship between the short-run total cost function and the short-run total product curve.
Factors Affecting the Position of the Short-run Cost Curve
A variety of short-run circumstances affect the position of the total cost curve. Among them are the prices of variable inputs, the quality of care, the patient case-mix, and the amounts of the fixed inputs. Whenever any one of these variables changes, the position of the cost curve changes through either an upward or a downward shift, depending on whether costs increase or decrease.
Answer preview to explain the law of diminishing marginal productivity.