Explain why slope of production function falls as more workers are hired
Explain why the slope of the production function falls as more workers are hired, that is, total product increases at a decreasing rate, while the slope of the total cost curve rises as more output is produced, that is, TC increases at an increasing rate.
Explain why slope of production function falls as more workers are hired
1
Use the law of supply caused by firms experiencing increasing marginal cost in the short run to explain why all producers must receive a surplus whenever they produce and sell more than one unit of a product but may receive no surplus if only one unit is sold. Make up a numerical example to illustrate. Provide two reasons why producer surplus must increase when the price of a product rises. Hint: Refer back to Question 1 on Assignment 3.
law of supply
Use the law of supply caused by firms experiencing increasing marginal cost in the short run to explain why all producers must receive a surplus whenever they produce and sell more than one unit of a product but may receive no surplus if only one unit is sold. Make up a numerical example to illustrate. Provide two reasons why producer surplus must increase when the price of a product rises. Hint: Refer back to Question 1 on Assignment 3.
2
Explain why the slope of the production function falls as more workers are hired, that is, total product increases at a decreasing rate, while the slope of the total cost curve rises as more output is produced, that is, TC increases at an increasing rate.
3
Explain fully why the short-run ATC curve is U-shaped, that is, falls then increases as more output is produced in the short run.
4
Why is the long‐run ATC also U‐shaped? Explain fully.