Micro Week4

[Name of Author]Running Head : MICRO WEEK4[Name of Professor][Date]Micro Week4[Name of Author][Name of University]Micro Week4Law of diminishing returns states that there is a sure level of harvest-feastion wherein an increase on one of the inputs keeping opposer things constant results in a declensionrease in return ( speak toales , Economics Principles and ApplicationsMarginal product (MP ) is the site of flip in create as an input is increased by one unit , holding other factors constant , whereas , average product (AP ) is the neb of the action is declining attri anded to the equity of diminishing returns . On the other decease , AP is a fixed number which is commonly associated to the susceptibility of the exertion , the higher the AP , the more efficient it is in fleshly termsThe combination of the MP and A P constitute the 3 stages of production for wear : nation I , II and III are shown in memento 1Figure 1 . exemplifys of Production (Source : Costales , Economics : Principles and ApplicationsStage I shows that the production is change magnitude . At this stage MP and AP are alike change magnitude . Stage II , on the other hand , is an change magnitude at a lessen regulate production . This is where the law of diminishing returns can be observed . Nevertheless , Stage II is the most all important(p) stage because it is the stage where the production is at its peak . The tryst of input-output is efficient . Last , the Stage III shows the massive dec linage in the production , compose brought about by the law of diminishing returnsTo be satisfactory to determine the best combination of inputs . The constraints must be considered , which is usually in the work out of a budget constraint . The optimal combination of inputs therefore causes a profit maximizing setting of the unwaveringly . Cost minimization is ! one of which of the factors to be considered in profit maximizationFigure 2 .

Cost minimization ( Production of alternative and InputsThe iso represent represents the business organisation (budget line ) wherein every point in the line be the homogeneous . On the other hand , isoquant is a write out wherein all the points in the curve correspond to the same level of production The slope of the isoquant can be convey as the Marginal Rate of Technical Substitution (MRTS , the outrank in which the producer can substitute between devil inputs but steady have the same level of production . The hybridizing of the two leads to the optimal choice of inputs for a definite productionLaborers practically protest to be satisfactory to earn a stripped-down wage rate . However these are non often considered by the employers . This is because the firm must increase the cost of production ( final payment of the employees ) to be able to satisfy the wage rate caper . If the firm does not have excess resources , the firm may opt to lay-off workers just to the employees . The clamor for the wage rate continues and the firms still are not able to increase proceeds . Should their wages increase , some of them will not be able to work...If you want to get a full essay, bless it on our website: BestEssayCheap.com

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