Describe in detail how Diminishing Marginal Product arises from the assumption that some of a business's inputs are in fixed quantity over the period of time that is the short run. Often the convention is to assume that the business's production facility and the capital stock within it are the fixed factors of production in the short run. Inputs such as labor, and possibly some other supplies, are often assumed to be easier to adjust and therefore "variable" in the short run. The long-run then is whatever period of time is necessary for the firm to be able to vary all inputs. It may be helpful to use an example in your explanation of Diminishing Marginal Product.

When additional variable inputs are used, the marginal product from the extra use of the variable…

Answered: Describe in detail how Diminishing…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter10: Cost Functions

Section: Chapter Questions

Problem 10.3P

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Describe in detail how Diminishing Marginal Product arises from the assumption that some of a business's inputs are in fixed quantity over the period of time that is the short run. Often the convention is to assume that the business's production facility and the capital stock within it are the fixed factors of production in the short run. Inputs such as labor, and possibly some other supplies, are often assumed to be easier to adjust and therefore "variable" in the short run. The long-run then is whatever period of time is necessary for the firm to be able to vary all inputs. It may be helpful to use an example in your explanation of Diminishing Marginal Product.

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