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Microeconomics

The document covers key concepts in production economics, including definitions of production, total product, marginal product, and average product. It explains production functions, differentiates between linear and non-linear functions, and discusses the law of diminishing marginal returns along with stages of production. Additionally, it defines cost concepts, economies of scale, and provides examples and graphical representations of various production-related terms.

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41 views2 pages

Microeconomics

The document covers key concepts in production economics, including definitions of production, total product, marginal product, and average product. It explains production functions, differentiates between linear and non-linear functions, and discusses the law of diminishing marginal returns along with stages of production. Additionally, it defines cost concepts, economies of scale, and provides examples and graphical representations of various production-related terms.

Uploaded by

Faith
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Explain the following


a. Production
b. Total Product
c. Marginal Product
d. Average Product
2. What is a production function?
3. Distinguish between linear and non – linear production functions. Outline the features of
the Cobb-Douglas production function.
4. Distinguish between production in the short run and in the long run.
5. State and explain the law of diminishing marginal returns and also outline the 3 stages of
production in the Short – Run for an expanding firm with reference to the table below.
With the aid of graphs (TP, MP, AP) using the completed data in the table, plot and show
the 3 stages.
labour land TP AP MP

1 1 acre 2

2 1 acre 10

3 1 acre 21

4 1 acre 36

5 1 acre 55

6 1 acre 63

7 1 acre 70

8 1 acre 72

6. Define the following and give a numerical and graphical example for each:
a. Returns to Scale
b. Increasing to Scale
c. Constant to Scale
d. Decreasing to Scale
7. Define and Explain the following also list their properties:
a. Isoquant
b. Iso-cost line
c. Production equilibrium using isoquants and iso-cost lines.
8. Explain the following:
a. Marginal Rate of Technical Substitution
b. Law of Diminishing Marginal Rate of Technical Substitution.
9. Define economies of scale and distinguish between internal and external economies. What are
diseconomies and what causes them.
10. Explain the following:
a. Total Cost
b. Fixed Cost
c. Variable Cost
d. Average Cost (Average Total Cost)
e. Average Fixed Cost
f. Average Variable Cost
g. Marginal Cost
h. Average Variable Cost
11. Using a graph clearly show the cost curves (TC, FC, AC, MC, AVC, AFC). Show the
long run average cost on a separate graph.
12. When does a firm shut-down in the short-run production?
13. Complete the following table.

Q FC TC MC AC VC AV
C
1 $160 $240
2 $160 $320
3 $160 $400
4 $160 $480
5 $160 $560
5 $160 $640
6 $160 $720

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