(a) The point at which the marginal return of labor begins to diminish is to be determined. Concept Introduction: Diminishing Marginal Return: Is defined as the decrease in the marginal output of a production process with an increase in the amount of a single factor of production, while all other factors of production are kept as constant.

Question

1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Answer 1

Question

Chapter 7, Problem 3.8P

To determine

To determine:

(a)

The point at which the marginal return of labor begins to diminish is to be determined.

Concept Introduction:

Diminishing Marginal Return:

Is defined as the decrease in the marginal output of a production process with an increase in the amount of a single factor of production, while all other factors of production are kept as constant.

To determine

(b)

To determine:

The average variable cost when the quantity is 24 units is to be determined.

To determine

(c)

To determine:

The firm’s fixed cost is to be determined.

To determine

(d)

To determine:

The wage rate per day is to be determined.

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