**********There is a particular production enterprise, "Clothes "R" US" where you are combininglabor and capital to produce textiles. In the short run, you may assume that capital isfixed.i) On a picture, draw hypothetical Average and Marginal Product Curves for Labor. Labelthe axes. What do you understand about the Law of Diminishing Returns as it relates tothe shape of the MP curve?ii) The firm uses input to produce textiles and in the process incurs costs. Draw standardATC and MC curves. What is the connection between the productivity curves that youhave drawn in (i) and the cost (ATC and MC) curves?iii) Suppose in the Long Run, or the planning period, all inputs are variable (including thedecision to close down the business)-- What is the relation between Returns to Scale (orEconomies of Scale) and the various stages of the Long Run Average Total Cost curve?iv) As an economic analyst, you have access to all the Cost numbers. Suppose you wereto define a "Cost Elasticity of Output" (EC), as a measure of how responsive your costs areto output expansion, what would that formula look like, and what would the relevantvalues for EC be for the various stages of the Long Run Average Cost Curve?v) As you become well versed in the production of textiles, you realize that production is'lumpy' or 'indivisible'; i.e., average costs for small ranges of output do not change. Howdoes this change the shape/slope of the Average Cost Curve?******************************************************************

Total production (TP) is the production of a good by using the factors of production. Average…

There is a particular production enterprise, "Clothes "R" US" where you are combining labor and capital to produce textiles. In the short run, you may assume that capital is fixed. i) On a picture, draw hypothetical Average and Marginal Product Curves for Labor. Label the axes. What do you understand about the Law of Diminishing Returns as it relates to the shape of the MP curve? ii) The firm uses input to produce textiles and in the process incurs costs. Draw standard ATC and MC curves. What is the connection between the productivity curves that you d the cost (ATS and MC) curves? ding the