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Why does the marginal cost curve cut through the average variable cost curve exactly at the minimum of the average variable cost curve?
Marginal cost curve cuts average cost (variable or total cost) at its minimum simply to portray the law of variable proportions. The idea is as labor is increased with capital being fixed, productivity increases upto a point and then decreases and later becomes negative. To relate the same productivity with average cost function, the average cost first decreases , reaches a minimum and then increases. Now marginal cost is just a change in the total cost. Logic says that when MC is less than AC productivity is favourable, thus cost is falling. When MC is more than AC productivity is not favourable and thus the rising portion of the cost curve. When MC = AC , the productivity that was reducing the average cost per unit has maximized and from then on starts rising cost(or decreasing productivity). That is the only point where they can intersect.
What is diminishing marginal productivity explain with example?
the law diminishinf mean fixed cost and variable cost
How does the law of diminishing marginal productivity affect the cost of productions?
When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.
What effect does increased labor productivity have on average cost?
Increased labor productivity typically leads to a reduction in average costs for businesses. When workers produce more output per hour, fixed costs are spread over a larger number of units, decreasing the average cost per unit. Additionally, higher productivity can reduce variable costs associated with labor, further contributing to cost savings. Ultimately, this can enhance competitiveness and profitability for firms.
What is relation between marginal cost and marginal productivity of labour?
Marginal cost refers to the additional cost incurred by producing one more unit of a good or service, while marginal productivity of labor measures the additional output generated by employing one more unit of labor. The relationship between the two is that as the marginal productivity of labor increases, the marginal cost of production typically decreases, because more output is being generated per unit of labor. Conversely, if the marginal productivity of labor declines, marginal costs tend to rise, reflecting diminishing returns. This relationship is crucial for firms in determining optimal production levels and labor employment.
Productivity is the ratio of and .?
Total factor productivity is the ratio of total value added and the total cost of inputs.
Why does the marginal cost curve cut through the average variable cost curve exactly at the minimum of the average variable cost curve?
Marginal cost curve cuts average cost (variable or total cost) at its minimum simply to portray the law of variable proportions. The idea is as labor is increased with capital being fixed, productivity increases upto a point and then decreases and later becomes negative. To relate the same productivity with average cost function, the average cost first decreases , reaches a minimum and then increases. Now marginal cost is just a change in the total cost. Logic says that when MC is less than AC productivity is favourable, thus cost is falling. When MC is more than AC productivity is not favourable and thus the rising portion of the cost curve. When MC = AC , the productivity that was reducing the average cost per unit has maximized and from then on starts rising cost(or decreasing productivity). That is the only point where they can intersect.
How you can reduce cost of manufacture?
Reduce the cost of materials, labor or overhead, or improve productivity.
How much a cattle Sahiwal cost?
It cost $ 800-$2000 depend upon cattle health and productivity
What is diminishing marginal productivity explain with example?
the law diminishinf mean fixed cost and variable cost
Provision in a labor contract that ties pay raises to increases in productivity and the cost of living?
escalator clause The escalator clause said that wages would increase based upon increases in productivity and in the cost of living.
What is an example of an indirect cost associated with mismanaged organizational stress?
quality of productivity
How does the law of diminishing marginal productivity affect the cost of productions?
When marginal productivity is diminished, the cost of productions can decrease if the marginal costs for making an extra product is larger than the marginal revenue for that 1 extra unit product.
How become Wii games cost a lot?
Backward productivity in because buoyancy is negated
What is the Productivity impact and decline of natural resources?
Productivity is the average amount of produce per unit area.Data on input per unit area,energy consumption,cost per unit area,etc.are used to calculate productivity.
What are factors to consider when employing risk management?
residual risk, increased cost and decreased productivity
What does productivity tools mean?
Productivity tools can be software that help employer increase their business productivity: a few examples might be project management software, tot do lists, cost management software, employee monitoring software, print manager software and so on.
