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By definition marginal cost is the change in total costs for each additional item produced. Marginal costs will decrease when changes in inputs result in costs increasing at a decreasing rate. An example might be gains in productivity when hiring an additional unit of labor results in a more than proportional increase in output. Marginal costs would increase when an additional unit of an input results in a less than proportional increase in output (assuming input prices are constant).
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What action would a profit-maximizing firm take if marginal revenue is less than marginal cost?
You have four choices: 1 - Do not accept any additional orders. 2 - Raise prices until Demand equals current Sales levels. 3 - Find a way to reduce marginal costs. 4 - Determine at what point marginal revenue will exceed marginal costs and create a strategy to increase sales to at least that level.
What would cause a leftward shift in the supply curve for car washes?
A left-ward shift in the supply curve would be caused by an increase in its marginal cost, meaning that all units of car washing were strictly higher than before. Some examples might include: 1) increase cost of inputs (water, soap, etc.); 2) increase cost of operating capital (i.e.) machinery costs more to use than before); 3) increase in costs of maintenance for machinery and services.
If fixed cost do not change then the marginal cost?
Contrast to what we would normally think, changes in fixed costs do not affect marginal cost. For example, if a product costs $10 to produce, and the fixed cost goes up to $25, then marginal cost stays the same.
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
Why a producer would continue to increase output even though the marginal cost?
...of production may be rising? Answer: Because of increase in demand.
What action would a profit-maximizing firm take if marginal revenue is less than marginal cost?
You have four choices: 1 - Do not accept any additional orders. 2 - Raise prices until Demand equals current Sales levels. 3 - Find a way to reduce marginal costs. 4 - Determine at what point marginal revenue will exceed marginal costs and create a strategy to increase sales to at least that level.
What would cause a leftward shift in the supply curve for car washes?
A left-ward shift in the supply curve would be caused by an increase in its marginal cost, meaning that all units of car washing were strictly higher than before. Some examples might include: 1) increase cost of inputs (water, soap, etc.); 2) increase cost of operating capital (i.e.) machinery costs more to use than before); 3) increase in costs of maintenance for machinery and services.
If fixed cost do not change then the marginal cost?
Contrast to what we would normally think, changes in fixed costs do not affect marginal cost. For example, if a product costs $10 to produce, and the fixed cost goes up to $25, then marginal cost stays the same.
What is a stairstep variable cost?
Marginal costs may be zero or miniscule across a relevant output or activity level, but increase or decrease more dramatically once a threshold is crossed. For example, the marginal costs of producing one or two more units from a machine that is operating near capacity would be equal to the raw materials cost. The marginal cost to produce one unit in excess of capacity would equal the machine acquisition cost, as well as the raw materials cost. When depicted on a graph, these costs will be represented by a stair-step pattern.
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
Why a producer would continue to increase output even though the marginal cost?
...of production may be rising? Answer: Because of increase in demand.
What would lead to an increase in the increase in the inflation rate?
Rapidly rising production costs
Would you advise the management to sell a product even below the marginal costs?
Yes; provided that the only other reasonable option were to be keeping an unprofitable item: holding out for marginal cost, resulting in ZERO profit.
Why do firms experience increasing marginal returns and then diminishing marginal returns?
The short answer would be supply and demand. As demand for the firms increase, they will experience increasing returns. Likewise, as demand decreases, so do their returns.
Would an increase in contractility cause an increase to cardiac output?
Yes - an increase in contractility would lead to an increase in stroke volume. An increased stroke volume would cause an increased cardiac output.
Good writing costs companies money and these costs increase significantly if the communication is ineffective Which would NOT be two additionals costs to the company if?
computers
If natality equal to mortality what would cause the population to increase?
Immigration could cause the population to increase.
