Explain any assumptions and arguments we must use in order to conjecture that firms choose the production level that minimises their average cost under some reasonable conditions.

Q: ell us your strategy to maximize output given limited labor and capital constraints? What are the…

A: To maximize output, businesses can employ a variety of strategies depending on their industry,…

Q: Explain how a firm can have constant returns to scale in production and economies of scale in cost.

A: Constant Returns to scale refers to the situation where with the change in the production, the cost…

Q: For a firm to maximize profit, it must minimize the cost of producing whatever quantity it produces.…

A: An isoquant shows the different combinations of labor and capital that can produce a given level of…

Q: At what level of production does the marginal cost have the least value? What is the marginal cost…

A: The marginal cost curve is the U-shaped curve.

Q: hy does more inputs not necessarily translate into more output?

A: An input is something placed into a framework or interaction, while an output is produced or created…

Q: The following data refer to Questions 23 and 24 only. Number of workers Total Product Marginal…

A: Total product is the total output produced by a firm. Marginal product is the extra output produced…

Q: In the short run with fixed amount of at least one input, the law of diminishing returns must apply,…

A: When the one input is fixed then the firm experience diminishing returns because adding one more…

Q: What explains the shape of the average and marginal cost curves?  Is it linked to any production…

A: Marginal cost is the measurement of change in total cost with the increment of quantity produced by…

Q: A manufacturer can produce 5,130 cell phones when a dollars is spent on labor and y dollars is spent…

A: Cost refers to all types of expenses that incur in the production process. It can be variable cost,…

Q: Why is having a business objective of increased economies of scale always desirable?

A: Economies of Scale in the Business World When it comes to economies of scale, the size of the…

Q: True or False? This marginal cost function is the derivative of the production function.

A: We have, Cw1,w2,y=w113+w2133y2 The marginal cost  MC = Cyw,y It means the C(w1,w2,y) function is…

Q: True or False The slope of the total cost curve is equal to marginal cost, or the change in…

A: Total cost It refers to all the cost or expense that is incur in a production process.It is given by…

Q: Explain why an increase in the price of an input must typically cause an increase in the long-run…

A: As we know in long run , firms can increase both factors simultaneously and due to this firm…

Q: Would you please tell me how the economies of scale can spread out the cost of production, so that…

A: Economies of scale are achieved when a business starts witnessing the cost reductions due to…

Q: Is total cost 0 when the level of production is 0?

A: # We know that total cost is the sum of total fixed cost and total variable cost.

Q: Where average costs of production are lowest when all output is produced by a single firm

A: Average cost curve: It is a cost bend which is commonly U-shaped. Average variable cost (AVC) is…

Q: TRUE or FALSE and explain your answer fully If the cost of production is minimized, then all inputs…

A: The marginal productivity (MP) is the additional increase in the total productivity when one more…

Q: The President of ACME wants to know why he shouldn't produce at the point when average costs are the…

A: Introduction Total cost is the combination of total fixed cost and total variable cost. It includes…

Q: A firm produces identical outputs at two different plants. If the marginal cost at the first plant…

A: The firm seeks to maximize the profit. The profit is maximized where the MR=MC. Firm can use its…

Q: We know there is a link between productivity and costs. For example, recall the link between the…

A: In an economist's terms, when we talk about productivity, then we are talking about the marginal…

Q: input prices or an increase in efficiency would affect costs.

A: The cost of production is the expenditures incurred by the firm to produce the required output.…

Q: In choosing a production technology, how will firms react if one input becomes relatively more…

A: Production function depicts the relationship between inputs and outputs for a firm. It can also be…

Q: Use the following data to answer the question. The letters A, B, and C designate three successively…

A: Economies of Scale and Minimum Efficient Scale Unit costs can be as low as possible while still…

Q: Explain why the marginal cost of production must increased if the marginal product of the marginal…

A: The marginal cost of production refers to the change in total cost due to produce an extra unit of…

Q: Explain why marginal costs increase above some level of production in the short run.

A: The marginal cost is the additional cost incurred from producing one additional unit of goods and…

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.