Economics students often confuse (a) diminishing returns related to the variable factors of production and (b) diseconomies of scale. Explain the difference between the two and give one example of each.

Economics students often confuse (a) diminishing returns related to the variable factors of production and (b) diseconomies of scale. Explain the difference between the two and give one example of each.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Suppose you are production manager of a manufacturing company. Specify the name of your company…

Q: For a firm to maximize profit, it must minimize the cost of producing whatever quantity it produces.…

A: An isoquant shows the different combinations of labor and capital that can produce a given level of…

Q: Among the three stages of production, until what point should one produce considering the law of…

A: The law of diminishing marginal product explains the three stages of production that is applicable…

Q: If a firm has economies of scale, it must have increasing returns to scale. True or false? PLEASE…

A: Economies of scale means reducing production cost by increasing output at a large scale.

Q: Write about the production function with two and more than two variables

A: A function is basically a mathematical relationship between the dependent and the independent…

Q: When marginal cost exceeds average total cost, which of the following must be true? Question 14…

A: Costs are the expenses that a firm incurs in the form of the purchase of inputs to produce goods and…

Q: Carry out the following tasks to illustrate the law of diminishing returns: i. Deduce a production…

A: The production function determines all the input bundles that produce the same output level.The…

Q: eek and L = Labor (number of workers) When does the law of diminishing returns take effect?…

A: Given : Q = 50L+6L2 −0.5L3

Q: Which of the following production functions exhibit(s) constant returns to scale? I. Q= KL K+L II. Q…

A: Given: There are three production functions: 1. Q=KLK+L2. Q=2K+L3. Q=K0.8L0.2

Q: Suppose a soap-manufacturing production process is described by the following equation: Y = a + b…

A: The marginal product of labor measures the change in output due to change in labor. Mathematically,…

Q: Please choose two topics, one from Technical economies of scale and one from Pecuniary economies of…

A: Economies of scale are cost benefits that organizations gain when production becomes more efficient.…

Q: Show that increasing returns to scale can co-exist with diminishing marginal productivity

A: Meaning of Law of Variable Proportions: The term law of variable proportions refers to the…

Q: (a) Does this production function exhibit constant, increasing or decreasing returns to scale?…

A: (a) Returns to Scale:The formula for the production function is given by Q = f(L, K) = AL^a * K^ß.…

Q: The law of diminishing marginal returns _____. a) is relevant in the short run. b) assumes all…

A: In economics, the expression "returns" alludes to the output produced contrasted with the inputs…

Q: The total cost of producing 3 products is given by: TC=2A+3B+4C+2ABC 1. Is the total cost…

A: The total cost (TC) function is a mathematical depiction of the total cost incurred by a firm to…

Q: A firm has two plants that produce identical output. The cost functions are : C 1 = 10q – 4q 2 + q 3…

A: The average cost curve shows the per-unit cost of producing a specific quantity of goods or services…

Q: A manufacturer can produce 5,130 cell phones when a dollars is spent on labor and y dollars is spent…

A: Cost refers to all types of expenses that incur in the production process. It can be variable cost,…

Q: Why is having a business objective of increased economies of scale always desirable?

A: Economies of Scale in the Business World When it comes to economies of scale, the size of the…

Q: Which of the following equations does not represent a plausible production function? a. F(K,L) =…

A: Production function, in the study of economics, helps in establishing a relation between maximum…

Q: Production is described by the function f(K, L) = AL0.3K 0.3, A > 0.a. Interpret the exponents of…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: Discuss whether economies of scale have any relevance to such companies as Wal-Mart

A: Economies of scale: When long-term average costs and output levels are inversely correlated, an…

Q: A firm faces the production function: q=10L^0.32 K^0.56 (a) What kind of returns to scale does…

Q: Determine the marginal productivity functions, and evaluate them when I Interpret the results. 4 and…

A: Marginal product is the change in output level due to the increment of an additional unit of input.

Q: Consider the following information about the input choices and prices, produci the same output in…

A: Cost minimization refers to optimal usage of factors of production such that for production of a…

Q: If a firm has economies of scale, it must have increasing returns to scale. True or false?

A: Economies of scale refers to one of the competitive advantages that allow a firm to capture most of…

Q: Explain a firm’s production function. Include in your answer how time influences the production…

A: Production in economics refers to the act of producing goods and services by combining together…

Q: Microeconomics divides costs in to “short-run costs” and “long-run costs”. Can “long-run” differ…

A: The short run is defined as the time frame during which wages and prices of other production inputs…

Q: Would you please tell me how the economies of scale can spread out the cost of production, so that…

A: Economies of scale are achieved when a business starts witnessing the cost reductions due to…

Q: Solve the exercise with a production function with diminishing returns: In this case, production…

Q: d. In the short-run, Prunella cannot vary the amount of land she uses. Plot the output as a function…

A: Factors of production is used in production process and production function establishes the…

Q: (d) What do we mean by an exit price? What is the exit price if r = $100 and w = $2000? Explain. (e)…

A: Cost minimization problem of producer: For the given output level the firm and per unit cost of…

Q: Show using math and logic that for constant returns to scale production functions, MRTS between…

A: Production function and productivity: The production function determines all the input bundles that…

Q: “Sunk cost is a fixed cost, but not in the long term.” Is this statement true or false? Explain!

A: In an economy, the cost is classified in different forms according to its effect on organizational…

Q: A statement is given below. Please find what information is wrong in the given statement " The…

A: We have been given with a statement wich is:- " The total fixed cost of lemma's production is $35 at…

Concept explainers

Factors of Production

Factors of production – in simple words means the factors that are used for producing any product or service. This includes the resources which are necessary for the manufacturing of products. Factors of production are also known as the building blocks of the economy.

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Cost curves in the long run differ from cost curves in the short run. This is true right.
The total cost equation for producing X widgets is given by TC = $1,000 + $6X. The marginal cost per widget at a production level of 300 units is closest to which of the following? a. $2,800 b. $6 c. $8 d. $4,000.
Answer and give 1 sentence explanation.
Microeconomics - Production FunctionFind the returns to scale of the following production functions:F(K,L) = K1/2 * L1/2F(K,L) = A* K3/4 * L1/2F(K,L) = 3K + 2L
Suppose the production function for T-shirts can be represented as q = L0.25 K0.75. Show that the production function has constant returns to scale.
From the following production functions 1. Q= a1H + a2L + a3H2 + a4 L2 + a5HL, where ai> 0 2. Q = aH@ Ly, where a, @, y > 0 a. Derive the equation of the relevant isoquant. b. Find out whether the production function is well behaved. c. Examine whether the isoquant is well behaved and therefore represents the behaviour of a rational production. d. Derive equation which describes MRTS of 9ne factor. e. For each equation examine whether the production is homogeneous and if so, what is the degree of homogeneity. Is the equation characterized by IRTS, DRTS or CRTS.
a.)Suppose that labor is the only variable input in the production process. If the marginal cost of production is diminishing as more units of output are produced, what can you say about the marginal product of labor?b.)What are economies of scale? What are economies of scope? What is the difference between the two?
University level intermediate microeconomics, theory of production
What is sunk cost? Provide an example of sunk cost other than one from the book and explain it. Why are such cost irrelevant in making decisions about future actions?
Problem 2 (a) Find an example of a production technology that is such that two inputs must be used in fixed proportions (hopefully a different one from the examples discussed in class). Explain why you chose this example. Draw a typical isoquant of the example you found. (b) Find an example of a production technology that is such that two inputs are completely inter- changeable. Explain why you chose this example. Draw a typical isoquant of the example you found. (c) Find an example of convexity of production technology. Explain why you chose this example. Draw a typical isoquant of the example you found.
Q)solve it correctly The marginal products of capital (MPK) and labor (MPL) are, respectively, MPK = 2000 units; MPL = 1500 units. The input prices are: PK = $10/unit; and PL = $150/unit. To minimize production costs, the firm should A. increase both capital and labor B. decrease both capital and labor C. increase capital; decrease labor D. decrease capital; increase labor E. do nothing; costs are minimized
A firm produces according to the following production Function: Q= K^0.4L^0.5. MCK is $10 per K, and MCL is $8 per L. What sort of returns to scale does the firm face? Motivate your answer.