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The production function can have many uses. It can be used to compute least-cost factor combination for a given output or maximum output combination for a given cost. Knowledge of production function can be helpful in deciding on the value of using a variable factor in the production process. As long as marginal revenue productivity of a variable factor exceeds its price, it would be profitable to increase its use. When marginal revenue productivity of factor becomes equal to its price the extra employment of the factor must be stopped. Because the production function demonstrates the returns to scale it would help in the decision making. If the returns to scale are diminishing, it's not worthwhile to increase production. Opposite would be true if returns to scale are increasing.
A firm with market power has estimated the following demand function for its product: Q = 12,000 – 4,000 P where P = price per unit and Q = quantity demanded per year. The firm’s t
Infant Industry Argument Advocates of this maintain that if an industry is just developing, with a good chance of success once it is established and reaping economies of sale,
Q. Time Factor for Determinants of Demand? Price-elasticity of demand depends moreover on the time that consumers take to adjust to a new price: longer the time taken, greater
CAPITAL ACCOUNT This records all transactions arising from capital movements into and out of the country. There are a variety of such capital flows recorded, namely: i.
CLASSICAL VIEW ON UNEMPLOYMENT The classical economists as we observed in Unit 1 of this course, were of the view that full employment prevailed in the economy all the tim
The acme paper company lowers its price of envelopes (1000 count) from $6to $5.40.
Search and Matching Model It should be clear to you fiom the earlier section that there are a variety of models under the rubric of search theory. In this sec
wHAT IS THE SIGNIFICANCE OF EXPECTATION ELASTICITY ?
The emergence of managerial economics as a separate course of management studies can be attributed to at least three factors: 1. Growing complexity of business designs maki
Q. Explain about Time series analysis? An analysis of relationship between variables over a period of time. Time-series analysis is helpful in assessing how an economic or othe
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