ECON 1000 Lecture Notes - Lecture 19: Diminishing Returns, Marginal Cost, Marginal Product

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cerisegiraffe538

8 May 2017

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Econ 1000 week 10 lecture 19. Costs curves are generally a u shape: due to the reason that diminishing returns and diminishing products the marginal costs will increase per unit produced. Diminishing marginal product, it takes more resources to produce the extra apple. Short run when one resource is fixed. 2q = f(2l, 2n) constant returns in scale. Long run and short run atcs meet on the middle points of the short run curves. Long run curves, have a decreasing slope. Diseconomies of scale, decreasing returns to scale: the costs double as you double your outputs but the costs of a unit does not increase. You can get diseconomies of scale, and if you cant find them you can replicate or repeat old models. However, diseconomies of scale are hard to find. When firms are too big, they are hard to manage. In market economies there are pockets of central planning, firms have people who manage different sections of economies.

Related Questions

36) A firm encountering economies of scale over some range of output will have a:

a) rising long-run average cost curve.

b) falling long-run average cost curve.

c) constant long-run average cost curve.

d) rising, then falling, then rising long-run average cost curve.

37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) a violation of the law of diminishing returns.

38) The larger the diameter of a natural gas pipeline, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of:

a) economies of scale.

b) normative economies.

c) diminishing marginal returns.

d) an increasing marginal product of labor.

39) If all resources used in the production of a product are increased by 20 percent and output increases by 20 percent, then there must be:

a) economies of scale.

b) constant returns to scale.

c) diseconomies of scale.

d) increasing the average total costs.

40) Economies and diseconomies of scale explain why the:

a) short-run average fixed cost curve declines so long as output increases.

b) marginal cost curve must intersect the minimum point of the firm's average total cost curve.

c) long-run average total cost curve is typically U-shaped.

d) short-run average variable cost curve is U-shaped.

jadeshark411

The shape of the long-run cost curve is determined by economies and diseconomies of scale. Contrast this curve with the short-run cost curve as it relates to increasing and diminishing marginal returns to labor.

Describe an industry that would meet the conditions of a perfectly competitive industry and how the individual firms would respond to an increase in the market demand for the product.

When developing short-run cost curves, it is assumed that all firms in the perfect competition have the same cost curves and they all make identical short-run profits or losses. Contrast this to the real world and why individual firms might experience different cost curves and different profits.

orchidsheep271

constant costs

increasing returns to scale

constant returns to scale

isocost curve

decreasing returns to scale

isoquant

diseconomies of scale

long-run average cost

economies of scale

long-run marginal cost

economies of scope

marginal rate of technical substitution

expansion path

short-run expansion path

___A curve that displays all the various combinations of inputs that will produce a given amount of output.

___The rate at which one input is substituted for another along an isoquant.

___Line that shows all the possible combinations of inputs that can be purchased for a given total cost.

___A curve showing all of the cost-minimizing levels of input usage for various levels of output.

___When the usage of all inputs is increased by an equal proportionate amount, output ___increases by exactly the same proportion.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a larger proportionate amount.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a smaller proportionate amount.

___Cost per unit in the long run.

___The change in long-run total cost per unit change in output.

___When long-run average cost falls as output increases.

___When long-run average cost increases with increases in output.

___Long-run average and marginal costs are equal for all levels of output.

___The situation in which the joint cost of producing two goods is less than the sum of the separate costs of producing the two goods.

___Horizontal line showing the cost-minimizing input combinations for various output levels when capital is fixed in the short run.

aquamarineguinea-pig889

ECON 1000 Lecture Notes - Lecture 19: Diminishing Returns, Marginal Cost, Marginal Product

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