Economics Exercise 1. 1) for a Profit-Maximizing Term Paper

Open, View, and/or
Download this Document

Total Length: 454 words ( 2 double-spaced pages)

Total Sources: 1

Page 1 of 2

Economics

Exercise 1. 1) For a profit-maximizing firm, there is a difference between the short run and the long run. In both situations, the company wants to maximize profit: P = TR -- TC (Skaggs, 2010). In the short run, such a firm should increase its output so long as the marginal revenue is greater than the marginal costs (Ibid). Production therefore is expanded only to the point where MR=MC, because after that point the profit begins to shrink. The major difference is that in the long-run, if the firm is struggling, it may produce even if MR

Stuck Writing Your "Economics Exercise 1. 1) for a Profit-Maximizing" Term Paper?

View All Our Example Economics Exercise 1. 1) for a Profit-Maximizing Term Paper

Have A Custom Example Essay Written



2) a) Give this chart

Workers

Output

Marginal Production

0

0

1

8

8

2

20

12

3

35

15

4

45

10

5

52

7

6

57

5

7

60

3

The point at which there are increasing returns is up until the 3rd laborer. The margin increase in productivity with the 3rd laborer is15 units. The marginal increase in productivity for the 4th laborer is 10 units, which is diminishing returns. So the 3rd worker is the point where increasing returns to labor exist.

b)

Workers

Output

MP

AP

0

0

1

8

8

8.00

2

20

12

10.00

3

35

15

11.67

4

45

10

11.25

5

52

7

10.40

6

57

5

9.50

7

60

3

8.57

This chart shows that the range where the marginal product is greater than the average product is between 2-3 laborers. At 1 these are the same, obviously. During this stretch, the marginal productivity is increasing. The.....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Economics Exercise 1 1 For A Profit-Maximizing" (2013, November 30) Retrieved May 2, 2024, from
https://www.aceyourpaper.com/essays/economics-exercise-1-1-profit-maximizing-178557

Latest MLA Format (8th edition)

Copy Reference
"Economics Exercise 1 1 For A Profit-Maximizing" 30 November 2013. Web.2 May. 2024. <
https://www.aceyourpaper.com/essays/economics-exercise-1-1-profit-maximizing-178557>

Latest Chicago Format (16th edition)

Copy Reference
"Economics Exercise 1 1 For A Profit-Maximizing", 30 November 2013, Accessed.2 May. 2024,
https://www.aceyourpaper.com/essays/economics-exercise-1-1-profit-maximizing-178557
   

Open, View, and/or
Download this Document
order custom essay example