decreasing, constant and increasing marginal cost

Related BrainMass Solutions

• Cost functions

  (d) Does this firm operate under decreasing, constant, or increasing returns to scale? Why?

• Production Cost Analysis: Calculating MC, AVC, ATC and Output of the Firm

  d) What is average total cost? e) Is average variable cost increasing, constant, or decreasing? What about average total cost? Solution: a) What is marginal cost?

• costs

  The average variable cost is constant, because the total number of workers and the wage rate is constant. The average total cost would also remain constant, because the total fixed cost and the total variable cost stays constant.

• Production Theory Functions

  (c) Does the function exhibit decreasing, constant, or increasing returns to scale? Is homogenous of some degree k>0?

• Calculating Various costs for given cost function.

  Discuss the results in terms of the decreasing, constant and increasing marginal costs. We don't see any interval for which marginal costs are constant. Marginal costs are decreasing for Q<3.33 and Marginal costs are increasing for Q>3.33.

• Productivity

  increases d. marginal cost must decrease as output increases In the short run, MP=dQ/dL, and MC = dTC/dQ=d(w*L)/dQ= w*dL/dQ if w is constant, then MC=w/MP Thus, when MP is decreasing, MC is increasing as Q increase.

• Technology and Production Functions

  If this quantity (K/L) is decreasing, then the following can happen, i) K must be decreasing and L is increasing or constant ii) L is increasing and K is decreasing or constant iii) both K and L are increasing but L increases faster In case iii)

• Studying average and total cost curves

  AVC is decreasing for output levels for which Marginal cost (MC) is less than AVC. AVC starts increasing for output levels when marginal cost is higher than AVC . ii) AVC and ATC and Q increases Shape of both curves is quite close to U shape.

• Utility Curves

  333992 Utility Curves associated with risk in marginal utility of wealth What types of utility curves (increasing, decreasing, or constant marginal utility of wealth) are generally associated with each of the following attitudes toward risk: (a) risk-averse