Specific subject: Microeconomics - Production and Costs Function  Comment on the following statements, whether they are true, false or uncertain: (a) "The fact that the marginal product of the variable factor of production is increasing is ultimately irrelevant to the firm's cost structure, since its marginal cost curve will be increasing anyway." b) Variable Cost (VC) is ALWAYS greater than Fixed Cost (FC). c) If the Average Cost (AC) is decreasing, then the Marginal Cost (MC) is less than the Average Cost (AC).

Why would labor be treated as a variable cost?   Question 24 options:   they are costs incurred in the act of producing that will decrease with quantity produced   they are made before production starts and vary according to the specific line of business   labor costs are an input cost that firms are unable to change in the short run   producing larger quantities of a good or service generally requires more worker

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Introduction to Calculus in Economics (continued): In the previous Problem Set question, we started looking at the cost function C (æ), the cost of a firm producing z items. An important microeconomics concept is the marginal cost, defined in (non- mathematical introductory) economics as the cost of producing one additional item. If the current production level is æ items with cost C (z), then the cost of computing h additionial (C(z+h)-C(z)) items is C (z + h). The average cost of those h items is . As we analyze the cost of just the last item produced, this can be made into a mathematical model by taking the limit as h → 0, i.e. the derivative C' (z). Use this function in the model below for the Marginal Cost function MC (x). Problem Set question: The cost, in dollars, of producing z units of a certain item is given by C (z) = 0.02a3 – 10z + 450. (a) Find the marginal cost function. MC (z) (b) Find the marginal cost when 50 units of the item are produced. The marginal cost when 50…