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
Wiki User
∙ 15y ago
Add your answer:
Earn +20 pts
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.
How does interest rates affect people?
Interest rates affect the value of holding assets compared to the value of holding money (since putting your money in an investment or a bank account is the opportunity cost to holding it as money). When interest rates increase, it is more profitable to save money than before, so the savings rate (the rate at which people save money at) increases and consumption decreases. Additionally, the interest rate also affects the net present value of the capital stock, wages, and other inputs in production, so production changes with the interest rate. Therefore, the interest rates can affect consumption and production.
Laws of returns to scale?
The Laws of Return to Scale explains the behaviour of rate of increase in the output/production to the subsequent increase in the inputs i.e. the factors of production in the long run.In the long run all factors of production are variable and subject to change due a given increase in size/scale .The laws of Returns to scale is a set of three inter-related and chronological laws (stages)Law of Increasing Returns to ScaleLaw of Constant Returns to ScaleLaw of Diminishing returns to ScaleA] LAW OF INCREASING RETURNS TO SCALEIt is mostly the first of the laws to occur as in this stage the newly added indivisible factors of production have not yet reached their installed capacity i.e. maximum output.This also occurs due to adoption of specialized machinery and increasing efficiency in production and the per unit production cost decrease. There can be several other reasons too.B] LAW OF CONSTANT RETURNS TO SCALEThis stage occurs when the maximum capacity of the inputs is used to create the maximum output .The rational producer naturally prefers this stage as the returns from all the inputs largely remain the same . This stage occurs in every production business as there is a certain limit to the increase in the productionC] LAW OF DIMINISHING RETURNSthis stage when the producer further increases his capacity of production and lets the diseconomies of large production enter in the trading of the business. The production starts giving a negative rate of return .i.e. the production decreases\diminishes. This forces the producers to downsize and eventually stop their production.
What is the affect of a per unit tax on marginal cost of production?
a per unit tax directly affects the marginal cost schedule by increasing the value of each marginal cost at each value by the amount of the tax
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 subsidy affect supply?
It decreases cost of production and increases supply.
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 the meaning of cost of inputs?
its when you have it with someone hhahhahhaha
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.
How does interest rates affect people?
Interest rates affect the value of holding assets compared to the value of holding money (since putting your money in an investment or a bank account is the opportunity cost to holding it as money). When interest rates increase, it is more profitable to save money than before, so the savings rate (the rate at which people save money at) increases and consumption decreases. Additionally, the interest rate also affects the net present value of the capital stock, wages, and other inputs in production, so production changes with the interest rate. Therefore, the interest rates can affect consumption and production.
Production cost formula?
cost of production formula
How does the cost of production and the selling price affect the profit?
As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.
Laws of returns to scale?
The Laws of Return to Scale explains the behaviour of rate of increase in the output/production to the subsequent increase in the inputs i.e. the factors of production in the long run.In the long run all factors of production are variable and subject to change due a given increase in size/scale .The laws of Returns to scale is a set of three inter-related and chronological laws (stages)Law of Increasing Returns to ScaleLaw of Constant Returns to ScaleLaw of Diminishing returns to ScaleA] LAW OF INCREASING RETURNS TO SCALEIt is mostly the first of the laws to occur as in this stage the newly added indivisible factors of production have not yet reached their installed capacity i.e. maximum output.This also occurs due to adoption of specialized machinery and increasing efficiency in production and the per unit production cost decrease. There can be several other reasons too.B] LAW OF CONSTANT RETURNS TO SCALEThis stage occurs when the maximum capacity of the inputs is used to create the maximum output .The rational producer naturally prefers this stage as the returns from all the inputs largely remain the same . This stage occurs in every production business as there is a certain limit to the increase in the productionC] LAW OF DIMINISHING RETURNSthis stage when the producer further increases his capacity of production and lets the diseconomies of large production enter in the trading of the business. The production starts giving a negative rate of return .i.e. the production decreases\diminishes. This forces the producers to downsize and eventually stop their production.
Different types of costs of production?
production cost, selling cost and sundry cost
What is meant by cost of production?
cost of production is the amout of money spend on the production of a perticular comodites.
