Definition of marginal cost The marginal cost of production is the additional cost incurred in producing 1 extra unit of output. For most production activities‚ in the short run‚ marginal cost curves are U-shaped. 3. Average cost (1) Average or unit cost Average cost is the total cost divided by the total number of units produced. (2) Average fixed and variable cost Average fixed cost (AFC) =FC/q‚ steadily falling. Average variable cost (AVC) =VC/q. (3) Minimum average cost When marginal cost is
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UH:\Games.exetility can be measured. • Marginal Utility of money remains constant • No change in income of the consumer‚ his taste & fashion to be constant • No substitute • Independent marginal utility of each unit of commodity Utility Characteristics: • Utility is subjective/not measurable • Utility is variable • Utility is different from usefulness • No legal or moral connotations Marginal Utility (MU) The word Marginal means “Border” or “Edge”. It is the
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Answers: of the negative externalities associated with these goods. it is unlawful for private firms to provide public goods. private markets will never provide goods that they know the government could provide. the private marginal cost is less than the social marginal cost. Correct private markets will never provide goods at a price of zero‚ which is the efficient price. Question 2 0 out of 1 points A common-property resource is one that is Selected Answer: Incorrect [None Given] Answers:
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Economics – Managerial economics defined • Economics of Effective Management – Identifying goals and constraints – Recognize the nature and importance of profits – Understand incentives – Understand markets – Recognize the time value of money – Use marginal analysis • Learning managerial economics 1-2 Introduction Economics • The science of making decisions in the presence of scarce resources. – Resources are anything used to produce a good or service‚ or achieve a goal. – Decisions are important
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caught for Juan‚ a commercial fisherman. Labor (hours) 1 2 3 4 5 6 Quantity of Fish (pounds) 10 18 24 28 30 32 Marginal Product (pounds) a. Complete the Marginal Product column in the Table. b. Characterize the production function‚ i.e. does the production function display increasing marginal returns‚ diminishing marginal returns‚ etc. c. Using the data above‚ graph Juan’s marginal product curve. Be sure to label the horizontal and vertical axes. Is your graph consistent with your answer to part
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(a) A list indicating which categories cost you included in your determination of marginal cost. Briefly explain why you included these and excluded the other categories. | - “Marginal Cost” is aggregation of variable costs whose amount varies pertaining to production quantity. The lists of marginal cost are as follows. ◎ The lists of marginal cost Item | Description | TotalElectricity Cost | in the case of new plant of Alusaf‚ it amount of 16% of per ton aluminum price for every ton of
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[3 points each] Note: Use diagrams and/or equations to explain your answer. I. Explain the difference between diminishing total returns to labour and diminishing marginal returns to labour. Diminishing returns to labour means that an increase in the number of labour units will decrease the amount of output. Diminishing marginal returns means that additional units of labour increase output at a decreasing rate. II. Suppose the production function for T-shirts can be represented as q =
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Public Expenditure - Regulate Market Failures Market Failure - Is an economic situation where resources are misallocated - May be caused by two possible factors: ○ Market Power ○ Non-existence of Markets Why is Market Power a source of Failure? - Marginal Cost Pricing is not practised (P > MC) - There is a tendency for firms to behave according to profit-maximization motive because they have market power. - This type of market failure is borne from Imperfect Competition Non-Existence of Markets -
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market price. The rm can sell all that it wants to at this price. 2. A monopoly faces the market demand curve because it is the only seller in the market. If a monopoly wants to sell more output‚ it must lower the price of its product. A monopoly’s marginal revenue will always be less than the price of the good (other than at the rst unit sold). 1. If the monopolist sells one more unit‚ his total revenue (P Q) will rise because Q is getting larger. This is called the output e ect. 2. If the monopolist
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Week I Quiz Results/Answers ECO561 1. Revenue increases when * producer surplus increases 2. An increase in the price of an inelastic good * increases revenues 3. Price elasticity of Demand increases when * people become less price sensitive over time 4. The purpose of a market in a market system is to * bring buyers and sellers into contact 5. By specializing in the production of one good‚ a company is able to benefit from economies of scale which increases its revenue. Which
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