ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
(a) Explain why Binful, Bernard, Freeman, Emelia and Anortiah as managers of Ohenewaa & Ama Group of Companies should choose a method of production that is technically efficient as well as economically efficient.
(b) i. State the law of diminishing returns to variable proportions.
- Why is the law important to managers in their production decisions?
Expert Solution
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Step 1
a. An economically efficient method of production is the method that produces a given level of output at the lowest possible cost and also must use few inputs as possible. It is also technically efficient.
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- Accountants and Economists differ in their calculations of profits in that; Select one: a. economists consider sunk costs b. accountants consider implicit costs only c. accountants consider explicit costs only d. all of the abovearrow_forward21) In the short run where total variable cost is ________ at a(n) ________ rate, marginal cost is positive and decreasing.A) increasing; decreasing B) increasing; increasingC) decreasing; decreasing D) decreasing; increasingarrow_forwardProvide details/explanations of your solutions,indicate any formulas you are using and clearly show your work.arrow_forward
- No cost function has been provided. Please see attached.arrow_forward(b) Also, use this information to then set up another diagram showing the firm's short run marginal cost (MC), average total cost (ATC), and average variable cost (AVC), with output on the horizontal axis (For the marginal cost, remember that when you graph marginal values you should always put them in the middle of the horizontal range that they are calculated over).arrow_forwardChris The use of fixed cost items to magnify the firm's results Correct! What are some uses for break-even analysis? Select all that apply, then click Submit below To see how much the changes in cost affect variable costs. To see how much the changes in volume affect cost and profit. To determine the magnitude of operations necessary to avoid loss. To figure out the most efficient level of fixed costs for the firm. To figure out the most inefficient way to make profit. To figure out the operating leverage. Submitarrow_forward
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