(a) By clearly distinguishing between fixed and variable factor of production, define the law of diminishing returns. (b) Using ONE clearly labelled diagram, illustrate the following: Average Variable cost, Average Total Cost, Average Fixed Cost and Marginal Cost.

(a) By clearly distinguishing between fixed and variable factor of production, define the law of diminishing returns. (b) Using ONE clearly labelled diagram, illustrate the following: Average Variable cost, Average Total Cost, Average Fixed Cost and Marginal Cost.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 23RQ: Which costs are measured on per-unit basis: fixed costs, average cost, avenge variable cost,...

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Question

2. (a) By clearly distinguishing between fixed and variable factor of production, define the
law of diminishing returns.

(b) Using ONE clearly labelled diagram, illustrate the following: Average
Variable cost, Average Total Cost, Average Fixed Cost and Marginal Cost.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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