Suppose that the only inputs your company uses are labor and capital. t is possible to simultaneously have negative marginal returns to labor and increasing returns to scale if the marginal returns to capital are positive and larger marginal returns to labor. As a manager in this situation (negative marginal returns to labor and increasing returns to scale), you can minimize your average total cost in the short run by decreasing the quantity of labor employed What changes would you make in this situation to minimize your average total cost i the long run? (Select all that apply.) A. Decrease your use of labor to the minimum possible amount. B. Change your production process such that labor no longer has a negative marginal product. C. Make changes such that production takes place on the upward sloping portion of the cost curve. than the negative

Suppose that the only inputs your company uses are labor and capital. t is possible to simultaneously have negative marginal returns to labor and increasing returns to scale if the marginal returns to capital are positive and larger marginal returns to labor. As a manager in this situation (negative marginal returns to labor and increasing returns to scale), you can minimize your average total cost in the short run by decreasing the quantity of labor employed What changes would you make in this situation to minimize your average total cost i the long run? (Select all that apply.) A. Decrease your use of labor to the minimum possible amount. B. Change your production process such that labor no longer has a negative marginal product. C. Make changes such that production takes place on the upward sloping portion of the cost curve. than the negative

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter7: Production And Cost In The Firm

Section7.A: Appendix: A Closer Look At Production And Cost

Problem 1AQ

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Consider the following diagram showing a range of isoquants and isocosts, with labour measured on the horizontal axis and capital measured on the vertical axis. Assume that when the firm is producing in the short run, capital is fixed at K but capital is variable in the long run. K, Capital K A B Q3 Isoquant Q2 Isoquant Q₁ Isoquant L, Labour Which of the following can we conclude? O Only point B represents cost minimisation in both the short run and the long run, as it is on the short run expansion path, as well being the cost minimising point in the long run. Points A, B and C represent cost minimisation in the long run only. There are no points that represent cost minimisation in both the short run and the long run. Points A, B and C represent cost minimisation in both the short run and the long run. Points D and E represent cost minimisation in the short run only. Points A, B and C represent cost minimisation but only in the short run. Points D and E represent cost minimisation in…