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Producer behavior at Economics assignment help


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University economics deals with subjects like economic theory, microeconomics, demand-supply gap, macroeconomics. These subjects are part of various evaluations like economics thesis, economics dissertation and economics essay. provides all such economics help and economics assignment help

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Producer behavior at Economics assignment help

  1. 1. economicsassignment
  2. 2. Consumer behavior and demandMICROECONOMICS
  3. 3. Producerbehavior and supply
  4. 4. Production function It refers to physical relationship between inputs and output under given technology. Q= f(F1, F2, ………………….Fn) Q stands for quantity of output f stands for function of ( or depends upon) F1, F2,…..Fn stand for various factor inputs needed to produce Q
  5. 5. Some important concepts Total physical product: TPP means the total output of a commodity at a particular level of employment of a variable factor (say, labor) keeping all other factor inputs (capital etc) constant. TPP= ∑ MPP TPP= APP*N
  6. 6.  Average physical product: it is per unit of a variable factor. APP= total physical product/ total unitsof variable factor Marginal physical product: it is an addition to the total product when an additional unit of a variable factor is employed. MPP= total product/ inputs
  7. 7. Schedule of tpp, app, mppNumber of Total output Marginal Averageworkers (L) (TP) product product (thousands (MPL = W (APL = Q/L) per year) (Q) Q/WL)0 0 - -1 10 10 102 28 18 143 54 26 184 76 22 195 90 14 186 96 6 167 96 0 13.58 92 -4 11.5
  8. 8. Relationship between tpp ,app,mpp1a) If MP > 0, TP will be rising as L increases. The TP curvebegins at the origin, increases at an increasing rate over therange 0 to 3, and then increases at a decreasing rate. TheMP reaches a maximum at 3, which corresponds to aninflection point (x) on the TP curve. At the inflection point,the TP curve changes from increasing at an increasing rateto increasing at a decreasing rate. b) If MP = 0, TP will be constant as L increases. The TP isconstant between workers 6 and 7.c) If MP < 0, TP will be declining as L increases. The TPdeclines beyond 7. Also, the TP curve reaches a maximumwhen MP = 0 and then starts declining when MP < 0.
  9. 9. 2. MP intersects AP (MP = AP) at the maximumpoint on the AP curve. This occurs at labour inputrate 4.5. Also, observe that whenever MP > AP,the AP is rising (upto number of workers 4.5) — itmakes no difference whether MP is rising orfalling. When MP < AP (from number themaximum point of AP. It is important tounderstand why. The key is that AP increases aslong as the MP is greater than AP. And APdecreases as long as MP is less than AP. Since APis positively or negatively sloped depending onwhether MP is above or below AP, it follows thatMP = AP at the highest point on the AP curve.
  10. 10. Stages of ProductionBased on the behavior of MP and AP, economistshave classified production into three stages: Stage 1: MP > 0, AP rising. Thus, MP > AP. Stage 2: MP > 0, but AP is falling. MP < AP but TP is increasing (because MP > 0). Stage 3: MP < 0. In this case TP is falling.
  11. 11. Evaluate yourself Why is the marginal product of labor likely to increase and then decline in the short run? Faced with constantly changing conditions, why would a firm ever keep any factors fixed? What determines whether a factor is fixed or variable? State clearly the relation between APL and MPL.
  12. 12. cOST It refers to money expenditure by a firm inproduction of a commodity is called the cost ofproduction.FIXED COST Fixed costs are costs that are independent ofoutput. These remain constant throughout therelevant range and are usually consideredsunk for the relevant range (not relevant tooutput decisions). Fixed costs often includerent, buildings, machinery, etc
  13. 13. VARIABLE COSTVariable costs are costs that vary withoutput. Generally variable costs increaseat a constant rate relative to labor andcapital. Variable costs may includewages, utilities, materials used inproduction, etc.
  14. 14. ATC, AVC, AC • AVC, ATC and MC fall first, then reach a minimumand finally rise as output increases.• The rate of change in MC is greater than that inAVC and therefore the MC is lowest at an outputlower than the output at which AVC is lowest.•The ATC falls for a longer range of output than theAVC and therefore the minimum ATC is at a largeroutput than the minimum AVC.•MC = AVC, when AVC is lowest.•MC = ATC, when ATC is minimum.
  15. 15. REVENUEThe amount of money that a company actuallyreceives during a specific periodRevenue is calculated by multiplying the price atwhich goods or services are sold by the numberof units or amount sold.
  16. 16. PROFIT MAXIMIZATIONTotal profit= total revenue- total cost.Condition for profit maximization:MR= MC MR M R / M C OPTIMUM Q MC UNITS OF COMMODITY
  17. 17. For further Info : (AUS)support@myassignmenthelp.net