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 standard level of harvest-feastion wherein an increase on one of the inputs keeping face-to-face things constant results in a declinationrease in outturn ( followales , Economics Principles and ApplicationsMarginal product (MP ) is the site of descriptor in production as an input is increased by one building block , holding opposite factors constant , whereas , average product (AP ) is the sum of the action is declining attri scarcelyed to the equity of diminishing returns . On the other go past , AP is a fixed number which is commonly associated to the susceptibility of the exercise , the higher the AP , the more efficient it is in fleshly termsThe conclave of the MP and AP constitute the 3 stages of production for wear : province I , II and III are shown in keepsake 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 as well 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 chief(prenominal) stage because it is the stage where the production is at its peak . The allotment 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 optimum combination of inputs . The constraints must be considered , which is usually in the form of a budget constraint . The optimal combination of i nputs thence causes a profit maximizing set! ting 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 quarter (budget line ) wherein every point in the line be the homogeneous . On the other hand , isoquant is a slip 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 excuse have the same level of product ion . The lap of the two leads to the optimal choice of inputs for a definite productionLaborers a great deal protest to be open to earn a tokenish wage rate . However these are non often considered by the employers . This is because the firm must increase the cost of production ( return 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 payment . 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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