A9+Connecting+Production+and+Costs

A9+Connecting+Production+and+Costs - Frank Chapter 10(Blue...

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Frank Chapter 10 (Blue Book) 1. Which letter corresponds to the inflection point on the total production function? 2. Which letter corresponds to the peak output on the total production function? 3. Which number corresponds to the tangency between the total product curve and a ray from the origin? 4. Which number corresponds to the right side intersection between the total production function and the horizontal axis? 1. Which number corresponds to the minimum average cost? 2. Which number corresponds to the fixed costs?? 3. Which number corresponds to the intersection of the marginal and average costs?
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a) Graphs – Based off of the cubic form i) Long Run (1) Based off of the assumption that a firm will face increasing, constant, then decreasing returns to scale. (2) LRMC – U-shaped, label point (d) where MC is at a minimum (3) LRAC – U-shaped, Originally higher than LRMC. Actually, at q=0, LRMC = LRAC, but since LRMC is declining, LRAC must “catch up.” (Show that using a quadratic based cost function, when q=0, the intercept
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A9+Connecting+Production+and+Costs - Frank Chapter 10(Blue...

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