aps4 - Intermediate Microeconomics - Wissink BRIEF ANSWERS...

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x ap mp x $ atc mc Intermediate Microeconomics - Wissink BRIEF ANSWERS TO PROBLEM SET #4 1.a. False. Increasing returns to scale has to do with proportional changes in all inputs and the effect of that on output. On the other hand, the law of diminishing returns deals with short-run production situations where at least one factor of production is fixed. You could easily have I.R.T.S. and still have the law of diminishing marginal returns. b. True. See first graph. c. False. It would produce a declining lratc relationship, but, srtc, srvc, lrtc would all be positively sloped. There are lots of cost curves to consider. Beware. d. False. Need to know input prices as well (unless the technology is characterized by perfect complements). e. False. See second graph. f. See second graph. It can be true that mc is rising while atc is still falling so statement is false . 2. labor total product average product marginal product 3 90 30 xxxx 4 110 27.5 20 5 130 26 20 6 135 22.5 5 7 136.5 19.5 1.5 a. Yes. b. After the 5th unit of labor.
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aps4 - Intermediate Microeconomics - Wissink BRIEF ANSWERS...

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