Short-Run Production & Cost Curves

Explore how productivity and costs relate in the short run

Learning Objectives

Production and Cost Graphs

Productivity: Marginal & Average Product

Line graph showing Marginal Product (orange) and Average Product (green) curves as functions of number of workers. Both curves rise initially then fall due to diminishing marginal returns. The solid portions show values up to your current worker count; dotted portions show potential values beyond.

Cost Curves: Marginal & Average Cost

Line graph showing Marginal Cost (orange) and Average Cost (green) curves as functions of output. Both curves are U-shaped. MC crosses AC at AC's minimum, reflecting the mirror relationship with the productivity curves.

Key Relationship: Productivity ↔ Costs

When MP is above AP: each new worker adds more than average → AP rises → MC is below AC and AC is falling.

When MP equals AP: AP is at its maximum → MC equals AC (MC crosses AC at its minimum).

When MP is below AP: diminishing returns dominate → AP falls → MC is above AC and AC is rising.

 

Production & Cost Data Table

The highlighted row shows your current worker level.

Short-run production and cost values by number of workers
Workers Total Product Marginal Product Average Product Total Cost ($) Marginal Cost ($/unit) Average Cost ($/unit)