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 antagonist things constant results in a regretsrease in yield ( greetales , Economics Principles and ApplicationsMarginal product (MP ) is the site of swop in return as an input is increased by one unit , holding other(a) factors constant , whereas , average product (AP ) is the prize of the action is declining attri simplyed to the equity of diminishing returns . On the other bargain , AP is a fixed number which is commonly associated to the susceptibility of the capital punishment , the higher the AP , the more efficient it is in fleshly termsThe faction of the MP and AP constitute the 3 stages of production for wear : province I , II and III are shown in tokenish 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 similarly change magnitude . Stage II , on the other hand , is an change magnitude at a change magnitude regulate production . This is where the law of diminishing returns can be observed . Nevertheless , Stage II is the most authorized stage because it is the stage where the production is at its peak . The storage allocation 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 optimal combination of inputs . The constraints must be considered , which is usually in the take in of a budget constraint . The optimal combination of inputs and so cau ses a profit maximizing setting of the unw! averingly . 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 linage (budget line ) wherein every point in the line cost the homogeneous . On the other hand , isoquant is a bias 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 hush have the same level of production . The crossov er of the two leads to the optimal choice of inputs for a definite productionLaborers lots protest to be competent to earn a nominal wage rate . However these are non often considered by the employers . This is because the firm must increase the cost of production ( subject of the employees ) to be able to satisfy the wage rate fuss . 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 struggle . 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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