Relationship between marginal cost and marginal product. Marginal cost is the additional cost attributed to an additional unit produced. Marginal product is the increase in the total product due to an additional resource allocation. The marginal cost and marginal return have an inverse relationship and can almost be represented as mirror images of each other. The peak of the marginal product corresponds with the lowest point of the marginal cost. Thus as marginal product increases
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plants. The demand for your firm’s product is P = 78 - 15Q‚ where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1 in order to maximize profits? A. 1 B. 2 C. 3 D. 4 2. You are the manager of a firm that produces output in two plants. The demand for your firm’s product is P = 78 - 15Q‚ where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. What
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from Lesson III-3: Monopoly The following questions practice these skills: Explain the sources of market power. Apply the quantity and price affects on revenue of any movement along a demand curve. Find the profit maximizing quantity and price of a single-price monopolist. Compute deadweight loss from a single-price monopolist. Compute marginal revenue. Define the efficiency of P = MC. Find the profit-maximizing quantity and price of a perfect-price-discriminating monopolist. Find
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choice? b) Explain how scarcity‚ choice and opportunity cost are relevant when choosing amongst alternatives? 2. Define the concept of “opportunity cost” and discuss various examples. 3. Explain how the concept of opportunity cost may be used to explain the following: a) Why very few petrol stations are found in the centre of large cities. b) Why it might be worthwhile for a company to contract out work even though contracting out may involve a higher monetary cost. c) Why tourists
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brand: please think about what you are saying about yourself when you do any work for someone else! 1. Consider a monopolist where the market demand curve for the produce is given by P = 520 – 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50. a. Given the above information‚ what is this monopolist’s profit maximizing price and output if it charges a single price? Answer: MR = 520 – 4Q MC = 100 + 2Q 520
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goods that a firm is manufacturing is in direct connection with the marginal product. Sometimes‚ less is more and less employees using the right equipment and technologies are able to perform much efficient that a greater number of employees that are using old tools in their activity. . As you well said‚ marginal cost and marginal product are strongly connected. When the value of the marginal cost is dropping‚ the value of the marginal product is raising and vice-versa. The quantity of the inputs can’t
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sMarginal Benefit / Cost and Scarcity Paper Uploaded by 989 on Aug 1‚ 2005 -------------------------------------------------------------------------------- Marginal Benefit / Cost and Scarcity Paper Define the concept of scarcity: Scarcity: The goods available are too few to satisfy individuals’ desires. Scarcity is a central concept in economics. Resources are scarce if any individual would prefer to have more of that good or service than they already have. Most goods and services
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Wikipedia‚ the free encyclopedia An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers. [1] With few sellers‚ each oligopolist is likely to be aware of the actions of the others. The decisions of one firm therefore influence and are influenced by the decisions of other firms. Strategic planning by oligopolists needs to
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Microeconomics Topic 6: “Be able to explain and calculate average and marginal cost to make production decisions.” Reference: Gregory Mankiw’s Principles of Microeconomics‚ 2nd edition‚ Chapter 13. Long-Run versus Short-Run In order to understand average cost and marginal cost‚ it is first necessary to understand the distinction between the “long run” and the “short run.” Short run: a period of time during which one or more of a firm’s inputs cannot be changed. Long run: a period of time during which
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elasticity and income elasticity of demand (8 points). From Lecture Module 3 Equation 4 we learned the alternative formulation of elasticity. Alternative formulation of elasticity EP = dQ/dP * P/Q = dlnQ/dlnP Natural log: ln‚ uses the base “e” How? ∂lnQ/∂lnP =(d lnQ/dQ) * (dQ/dP) * (dP/dlnP) [ Note: dY/dX = 1/(dX/dY) since‚ dlnX/dX = 1/X‚ dX/dlnX = X] Example: Q = AP-α A:Constant>0 lnQ=lnA + ln(P-α) =lnA – αlnP EP = dlnQ/dlnP = -α ∝ =∆lnQ/∆lnP ∝ =P/Q* (∆Q/∆K)
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