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Determinants of Short Run Cost
- The relationship among the production function and cost can be exemplified by either increasing returns and cost or decreasing returns and cost.
- Increasing returns and cost
- Decreasing returns and cost
For Example: Assume that the wage rate (w) is fixed relative to number of workers hired.
Then: In conclusion:
Q=10-2P,PRICE DECREASE FROM RS 3 TO 2
what happens when price is fix and there is a change of the supply and demand curve
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