answersLogoWhite

0

when the production process requires the use of indivisible input, the average cost of production increases as output decreases. This is because the cost of the indivisible input will be be spread over a smaller quantity output. so to gain maximum returns,the output quantity must be regulated such that the quantity of indivisible input will more or less all be used up to manufacture that amount of output. cheers, mishaal

User Avatar

Wiki User

16y ago

What else can I help you with?

Continue Learning about Economics

How can a firm use the Cobb-Douglas production function to maximize profits in a real-world example?

A firm can use the Cobb-Douglas production function to maximize profits by determining the optimal combination of inputs, such as labor and capital, to achieve the highest level of output at the lowest cost. For example, a manufacturing company can use the Cobb-Douglas function to analyze how changes in labor and capital inputs affect production levels and costs, allowing them to make informed decisions on resource allocation to maximize profits.


How can one derive a cost function from a production function?

To derive a cost function from a production function, you can use the concept of input prices and the production technology. By determining the optimal combination of inputs that minimizes cost for a given level of output, you can derive the cost function. This involves analyzing the relationship between input quantities, input prices, and output levels to find the most cost-effective way to produce goods or services.


What is the relationship between the cost function and the production function in the context of manufacturing processes?

The cost function and the production function are closely related in manufacturing processes. The production function determines the output level based on inputs like labor and capital, while the cost function calculates the expenses incurred to produce that output. By analyzing the relationship between the two functions, manufacturers can optimize production efficiency and minimize costs.


Costs of a production that affect people who have no control over how much of a good is produced?

spillover cost


What is production and cost analysis in managerial economics?

According to Prof.Stigler the production function "is the name given to the relation ship between the rates of input and the rate output ".More precisely, it refers to maximum quantity of output that can be secured from the minimum quantities of inputs.

Related Questions

Explain why a firm needs to know its short run production function to be able to calculate the costs of production?

In the fhort-run production, a firm can produce and various its quantities of inputs to maximize its profit in a period of time frame. Variable cost, fixed cost, total average cost, marginal cost ....profit.


How does soil erosion affect the cost of crop production?

Soil erosion can increase the cost of crop production by reducing the fertility of the soil, which may require additional inputs like fertilizers to maintain productivity. It can also lead to loss of topsoil, which reduces water retention and nutrient holding capacity, ultimately affecting crop yield. Erosion control measures and soil conservation practices can help mitigate these effects and reduce the overall cost of crop production.


How does subsidy affect supply?

It decreases cost of production and increases supply.


How can a firm use the Cobb-Douglas production function to maximize profits in a real-world example?

A firm can use the Cobb-Douglas production function to maximize profits by determining the optimal combination of inputs, such as labor and capital, to achieve the highest level of output at the lowest cost. For example, a manufacturing company can use the Cobb-Douglas function to analyze how changes in labor and capital inputs affect production levels and costs, allowing them to make informed decisions on resource allocation to maximize profits.


How can one derive a cost function from a production function?

To derive a cost function from a production function, you can use the concept of input prices and the production technology. By determining the optimal combination of inputs that minimizes cost for a given level of output, you can derive the cost function. This involves analyzing the relationship between input quantities, input prices, and output levels to find the most cost-effective way to produce goods or services.


What is the relationship between the cost function and the production function in the context of manufacturing processes?

The cost function and the production function are closely related in manufacturing processes. The production function determines the output level based on inputs like labor and capital, while the cost function calculates the expenses incurred to produce that output. By analyzing the relationship between the two functions, manufacturers can optimize production efficiency and minimize costs.


What is the meaning of cost of inputs?

its when you have it with someone hhahhahhaha


What is the difference between prime cost and direct cost?

Prime cost is a way of measuring the total cost of the production inputs needed to create a given output. Likewise direct costs are directly linked to production but are more specific. For example, a direct cost would be direct labour, direct materials or direct expenses. Where as, prime cost is the total of all of those direct costs forming one prime cost.


Costs of a production that affect people who have no control over how much of a good is produced?

spillover cost


What is production and cost analysis in managerial economics?

According to Prof.Stigler the production function "is the name given to the relation ship between the rates of input and the rate output ".More precisely, it refers to maximum quantity of output that can be secured from the minimum quantities of inputs.


What is the difference between returns to scale and economies of scale in terms of their impact on a firm's production efficiency and cost structure?

Returns to scale refer to the change in output when all inputs are increased proportionally, while economies of scale refer to the cost advantages a firm gains as it increases its production levels. Returns to scale can impact a firm's production efficiency by affecting the overall output, while economies of scale can impact a firm's cost structure by reducing the average cost per unit as production increases.


Describe what productive efficiency means?

Productive efficiency is achieved when goods and services are produced at the lowest possible cost, using the most efficient combination of inputs. It is a state in which a firm produces at the lowest point on its average cost curve, maximizing output for a given level of inputs. Products are produced on the production possibility frontier, ensuring that resources are allocated efficiently.