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Question:
i) If X and Y are different processes producing the same commodity and the joint total cost (TC) is given by:
TC = X2 + 2Y2- 3XY
Using Lagrange Multiplier, find the X and Y which minimize costs when the prescribed level of output is 24.
ii) Critically and clearly explain the Law of Diminishing Returns to scale and to a factor.
iii) What do you understand by „Learning Curve? and how management can make use of the learning curve for production decision?
iv) Explain the relationship between average cost and marginal cost in the long run and briefly outline how it is a guide to management decision making.
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