The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

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Answer 1

Question

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

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Answer 3

Question

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

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Answer 4

Question

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

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Answer 5

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

Answer 6

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

Answer 7

Chapter 8A, Problem 1E

To determine

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Answer 8

Expert Solution & Answer

Explanation of Solution

The production curve, which is the APP curve, has input on the horizontal axis and output on the vertical axis. Now, when the input changes, the output reacts and the curve is made. In other words, when there is an increase in the inputs, output rises at the initial stage at higher rate, then at slower rate, and after a stage starts declining. On the other hand, in the cost curve, which is ATC curve, the output is represented on the horizontal axis and cost of input is represented on the vertical axis. In this curve, in the starting stage, the cost decreases at a higher rate, then at a slower rate and after a stage starts increasing when the production of output is raised.

The production curve, which is MPP curve, is same as the APP curve and has the same curve and trend on the curve. On the other hand, cost curve, which is the MC curve, is same as ATC curve and has the same curve and trend on the curve.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Productivity Curve:

This curve shows that when there is an increase in the variable resources, then in the initial stage, output increases at a higher rate, then at a slower rate, and then after a stage it may start to decline. The reason behind these changes is the law of diminishing marginal returns.

Cost Curves:

This curve shows the changes in the cost of production at each level of output, which means in the initial stage, cost of production decreases at a higher rate, then at a slower rate, and then after a stage it starts increasing. The reason behind this is also the law of diminishing marginal returns.

Answer 12

Ch. 8A - Prob. 1E

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

To explain: The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.

Explanation of Solution

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Chapter 8A Solutions

To explain:

The relation between the shapes of productivity and cost curves. Give a comparisonbetween the APP curve with ATC curve and the MPP curve with MC curve.