Practicafgfgl Work 4

Producers fgfgftheory

1- Name the four factors fgfgfgfgfof production. Explain the production function in the short run. 2- Explain in your own words the concept of diminishing marginal returns. 3- Draw the graph of figfgfgfxed, varia le and total costs. !rom this curve show how we can fgfgfgdraw the new graph of marginal and medium costs. "- #how why does the marginal cost function would always cut the average cost function is the minimum average cost. $- %n the short run, fixed costs are 1&,''' and the varia le cost is a function ()3 *x al cu o+ of output x. ,here will never e a price at which the firm will have to stop its operations immediately. ,rue or false- Explain. &- .ny short run average cost schedule will always e tangent to the long run average cost schedule at fgggffgfgfthe level of output for which short run average costs are minimised. ,rue or false- Explain. /- %f the prices of all goods were e0ual to the marginal cost of their production, the economy would e efficient even in the presence of externalities. ,rue or false- Explain. 8- The level of output where the average costs are at their minimum is the only optimal point of production. True or false? Explain. 9- Competitive equili fgfgffgfgfgrium is efficient only in the long run! when price equals minimum average costs. True or false? Explain. 1'- 1hen there are decreasing returns to scale throughout, the minimum of the short run average costs woufgfgfgfgfgfgfgfgfgfgld never e tangent to the long run average costs. ,herefore, the short run marginal cost will never intersect the long run marginal cost function. ,rue or false- Explain your answer. ""Explain! with a graph! how does a producer decide how much to produce. #t what point does he maximi$e fgfgfgfgfgfgfgfhis enefit. "%&hy do some companfgfgffgfgies 'eep producing even though there average cost is higher than their average price?