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प्रश्न
What do the long run marginal cost and the average cost curves look like?
उत्तर
The long run marginal cost (LMC) and long run average cost (LAC) are U shaped curves. The reason behind them being U-shaped is due to the law of returns to scale. It is argued that a firm generally experiences IRS during the initial period of production followed by CRS, and lastly by DRS. Consequently, both LAC and LMC are U-shaped curves. Due to IRS, as the output increases, LAC falls due to economies of scale. Then falling LAC experiences CRS at Q1 level of output which is also called the optimum capacity. Beyond Q1 level of output, the firm experiences diseconomies of scale and if the firm continues to produce beyond Q1 level, the cost of production will rise.
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संबंधित प्रश्न
Define marginal cost.
From the following information about a firm, find the firm's equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also, find profit at this output.
| Output (units) | Total Revenue (Rs) |
Total Cost (Rs) |
| 1 | 8 | 10 |
| 2 | 16 | 18 |
| 3 | 24 | 23 |
| 4 | 32 | 31 |
| 5 | 40 | 41 |
Why is the short run marginal cost curve ‘U’-shaped?
The following table shows the total cost schedule of a firm. What is the total fixed cost schedule of this firm?
Calculate the TVC, AFC, AVC, SAC and SMC schedules of the firm.
|
L |
TPL |
|
0 |
10 |
|
1 |
30 |
|
2 |
45 |
|
3 |
55 |
|
4 |
70 |
|
5 |
90 |
|
6 |
120 |
The following table gives the total cost schedule of a firm. It is also given that the average fixed cost at four units of output is Rs 5/-. Find the TVC, TFC, AVC, AFC, SAC and SMC schedules of the firm for the corresponding values of output.
|
L |
TPL |
|
1 |
50 |
|
2 |
65 |
|
3 |
75 |
|
4 |
95 |
|
5 |
130 |
|
6 |
185 |
Calculate Total variable cost and Marginal cost from the data given below.
| Output (units) | 0 | 1 | 2 | 3 |
| Total cost | 40 | 60 | 78 | 97 |
Given that the fixed cost is Rs. 30. Calculate TVC and TC from the following data:
| Output (units) | 0 | 1 | 2 | 3 |
| Marginal Cost | 0 | 10 | 15 | 25 |
