Where does the firm operate, Managerial Economics

Where does the firm Operate?

The firm will avoid stages I, II and III and will instead choose stage II.  It will avoid stage I because this shall involve using the fixed factor inefficiently because its MPP is increasing  since the variable input is spread to scarcely (thinly) over the fixed input.  Expansion of the variable input will permit specialization, hence increased output because of effective use of the variable input.

The firm shall avoid stage III because MPP for the variable input is negative.

Stage II is chosen because the marginal returns for both resources is diminishing.  Here the MPP and APP are declining but the MPP of both resources is positive.  With one factor fixed, and additional unit of the variable input increases total product.  Therefore the firm which attempts to be economically efficient operates in stage II.

Posted Date: 11/27/2012 7:19:10 AM | Location : United States







Related Discussions:- Where does the firm operate, Assignment Help, Ask Question on Where does the firm operate, Get Answer, Expert's Help, Where does the firm operate Discussions

Write discussion on Where does the firm operate
Your posts are moderated
Related Questions
iwant presentation on united postal services on social cost and benefits

Compensatory Financing Two other schemes for alleviating the effects of commodity trade instability have been operating for a number of years.  These are the IMF's Compensator


Measures to control inflation An inflationary situation can effectively be addressed/tackled if the cause is first and foremost identified.   Governments have basically three

Q. Show the Isoquant touching axis? Isoquants do not intersect: By definition isoquants such as indifference curves, can never cut each other. If they cut each other it will

Plot the demand schedule and draw the demand curve for the data given for Marijuana in the caseabove.

A firm producing hockey sticks has a production function given by X = 2 KL In the short-run, the firm's amount of capital equipment is fixed at K = 1000. The rental rate fo

Milton Friedman makes the demand for money a function of the real per capital permanent income. in this study the demand function for money is stated as; M/NPP= r( YP/NP) δ W

Burden of the national debt The extent of the burden on a nation of public debt, depends in the first place on whether it is an external or an internal debt.  The burden of th

Kinds of Bargaining arrangements Basically there are three kinds of bargaining arrangements, namely: Open Shop: In an open shop a union represents its members, but doe