4.7 When to Use the Principle of Diminishing Returns? You are the manager of a firm that produces memory chips for mobile phones. In your decision about how much output to produce this week, would you use the principle of diminishing returns? Explain. In your decision about how much output to produce two years from now, would you use the principle of diminishing returns? Explain.
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4.7 When to Use the Principle of Diminishing Returns? You are the manager of a firm that produces memory chips for mobile phones.
- In your decision about how much output to produce this week, would you use the principle of diminishing returns? Explain.
- In your decision about how much output to produce two years from now, would you use the principle of diminishing returns? Explain.
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- Please tell me which of the following multiple choice are correct for question 1.3) and 1.4) and 1.5) tell me only the ones which are correct.Thank you. 1.3) The figure below depicts the production function of grain for farmers under average growing conditions with the currently available technology. (SEE PICTURE ATTACHED) Select one or more: a. In a year with exceptionally good weather conditions, the production function curve will be higher and parallel to the curve above. b. A discovery of new high yielding crop seeds would tilt the production function curve higher anti-clockwise, pivoted at the origin. c. In a year of bad drought the production curve can turn downwards for large numbers of farmers. d. If there is an upper-limit on the amount of grain that can be produced, then the curve will end up horizontal for large number of farmers. 1.4) An example of innovation rent is: Select one or more: a. The cost of opening a new factory. b. The return to an entrepreneur…The phrase “returns to scale” is a way of describing the change in output that is produced as a result of a relative change in inputs used. Which of the following statements is true? If inputs are doubled and output doubles, this is called increasing returns to scale. If inputs are doubled and output doubles, this is called constant returns to scale. If inputs are tripled and output doubles, this is called increasing returns to scale. If inputs are doubled and output doubles, this is called decreasing returns to scale. If inputs are tripled and output doubles, this is called constant returns to scaleAS U4 Read the following scenario. Superconductor technology is becoming a widespread and indispensible component of the machines we use today. Superconductors can be found in everything from transportation to electronic signal transmission. Due to our increasing reliance on technology, the demand for superconductors has skyrocketed. As a result, production has also increased exponentially, which has greatly reduced the cost per unit. Use the scenario to answer the following question. Calculate a long-run average cost curve for superconductors.
- What is the difference between the short-run and long-run production periods? Why is it relevant to the economics analysis of firms? If different types of inputs are not as easy to adjust in a certain time period, what difference does this make to the graphs of cost curves for economic analysis?On August 10, 2020, a major storm known as a derecho, hit the Midwest US (especially in Iowa,Illinois and Indiana) with straight line winds of up to 100 miles per hour. It flattened the corncrop on millions of acres. This is clearly a natural production event that caused growingconditions to change from normal to below-normal.Also in August 2020, it became clear that the Peoples Republic of China (PRC) had returned as amajor customer of US corn. For political reasons, the PRC had not been purchasing US foodproducts.However, the PRC’s own domestic sources of grain were not able to meet growing demands forcorn. As a result, the 2020 US corn market was changed by the addition of the PRC as a majorbuying customer.· Use a standard supply and demand analysis to predict the combined effects of these twoevents on the US Corn Market.o What is the direction of change for the US Corn Supply curve? Why? What is theindependent impact of this supply-side event on the equilibrium price and…5. Proving constant returns to scale A production function expresses the relationship between inputs, such as capital (K) and labor (L), and output (q). The following equation represents the functional form for a production function: q= f (K, L). If a production function exhibits constant returns to scale, this means that if you double the amount of capital and labor used, output is twice its original amount. Suppose the production function is as follows: ƒ (K, L) = 4K +9L. Prove that this production function exhibits constant returns to scale by completing the following algebraic equations. Assume that z is a positive number. f (zK, zL) 111. = 2q Which of the following production functions exhibit constant returns to scale? Check all that apply. f (K, L) = KL f (K, L) 7K0.5 10.5 □ f (K, L) = 3K0.5 L0.1
- What do economists mean by "deminishing returns" to an input? What causes diminishing returns? Where would one observe this principle at a job and the real world?“When computers were first introduced in production, what affect do you think they had on labor productivity? Explain and illustrate this effect on the long-run equilibrium levels of output and the price level.”Prof. Smith and Prof. Jones are going to produce a new textbook. The production function for the book is: ?=?1/2?1/2?= is the number of pages in the finished book?= is the number of working hours spent by Smith?= is the number of working hours spent by JonesSmith's labor is valued at 3 TL per working hour and Jones's labor is valued at 12 TL per working hour. After having spent 900 hours preparing the first draft, Smith cannot contribute any more to the book. Jones will revise the Smith's draft to complete the book.a) How many hours will Jones have to spend to produce a finished book of 300 pages?b) What is the marginal cost of the 300th page of the finished book?
- AS U4 Read the following scenario. Superconductor technology is becoming a widespread and indispensible component of the machines we use today. Superconductors can be found in everything from transportation to electronic signal transmission. Due to our increasing reliance on technology, the demand for superconductors has skyrocketed. As a result, production has also increased exponentially, which has greatly reduced the cost per unit. Use the scenario to answer the following questions. How does a superconductor manufacturing company's output correlate with the quantity of labor in the short run?Please refer to the table attached. The number of fish caught per week on a trawler is a function of the crew size assigned to operate the boat. Based on past data, consider the following production function identifying the relationship between output and labor input. You may assume that capital is fixed at 10 units. Answer all of the question. Calculate APL and MPL. Graph APL and MPL. Do they have the expected shape? On your graph, identify the three stages of production.Suppose the production function for widgets is given by q=kl -0.8k²-0.21² where q represents the annual quantity of widgets produced, k represents annual capital input, and I represents annual labor input. Suppose k = 10; at what level of labor input does this average productivity reach maximum? (please put your answer in numerical values with no comma or decimal place). How many widgets are produced at that point? (please put your answer in numerical values with no comma or decimal place). If k = 10, at what level of labor input does MPL = 0? Suppose capital inputs were increased to k = 20, at what level of labor input does this average productivity reach maximum? widgets are produced at that point? (please put your answer in numerical values with no comma or decimal place). If k = 20, at what level of labor input does MPL = 0? answer in numerical values with no comma or decimal place). Does the widget production function exhibit constant, increasing, or decreasing returns to scale?…