Essays on Law Of Diminishing Returns

Question 1:

Suppose you are given the following: At output level of 6, what will be the marginal cost? Less than 2 Exactly equal to 2 More than 2 Given information is not enough to find out marginal cost Why is this? Question 2: What explains the U-shape of the AC curves in the short and the long run? Shapes of both, short and long run AC curves, are explained by the law of diminishing returns Law of diminishing returns explains the long run AC curve while economies and diseconomies of scale explain the short run AC curve Law of diminishing ...

American Public University

In this paper, I will analyze the advantages of creating a business in the form of corporation and cost structures of companies. Companies develop some strategies to have the possible least cost of production and gain an advantage in competition. Preference for forming an organization is the first step. Corporation legal structure presents some advantages to companies. Also, companies need to have full knowledge of costs to be able to manage costs to maximize their profits. Eventually, this paper will give some insights about these subjects. Corporation is a legal form of building an organization for a company. Operating ...

Growth Rate of GDP

The growth rate of GDP is measured in terms of the original level of the GDP. Let us calculate the GDP for the following figures:

GDP in 2013: $13.1 trillion

GDP in 2014: $13.3 trillion Growth in GDP: $0.2trillion Growth rate of GDP =( 0.2/13.1)*100 =1.53% If the growth rate remains the same, let us calculate the number of years that will be required for the GDP to double itself. 13.3(1+ 1.53/100)^t = 2*13.3 Or, (1+1.53/100)^t = 2 Or, (1.0153)^t = 2

Taking log of both sides:

tlog1.0153 = log2 Or, t= log2/log1.0153 Or, t =45.6 Thus it will take almost 46 years to double the GDP ...

- Impact of the Great Depression on the way government set policy

Following the collapse of the stock market in October 1929, the government was forced to embark on various policies in a bid to rescue the collapsing enterprises and to prevent a further economic slump. For instance, the New Deal policies were instituted by President Roosevelt’s administration in order to deal directly with and rescue banks financial institutions which had been affected by the financial crisis leading to the great depression from collapsing (Rothbard, 2008). Further policies included the flexing of the trade barriers and the suspension what was regarded as the ‘gold standard’ which ensured that financial supply would ...

- Housing costs me nothing. This statement is not correct from the microeconomic point of view. There is always an opportunity cost, which is always born by the person who asks the question. Sale of the house or rent of the flat while moving into a cheaper housing would provide quantification of such cost when compared to actual level of income. Also, there are maintenance costs and tax related costs. - Boring lessons. The financial cost of the lessons was already covered, from the microeconomic point of view, if the lessons are useless, participation will only increase ...

According to economics, the law of diminishing returns usually appears on a topic that deals with costs. According to the law of diminishing returns, additional workers in a firm, or variable input added in into the production process would result in a fall of the quantity produced in the short run or at least a single factor of production is held constant (Mankiw, pp. 158 - 165). The law of diminishing returns provides that each additional unit of an input used in the production results in an increase in production by smaller and smaller amounts. As an economics student, I have found ...

Malthusian Theory of Population

Introduction Ever since it was first presented to public in 1798, the anonymous little tract “Essay on the Principle of Population” has profoundly influenced the peoples’ vision of population and other demographic, economic, and, more recently, environmental issues. Produced by Thomas Robert Malthus in the midst of Victorian England’s Industrial Revolution, the concept outlined an important and fascinating correlation between population growth and what was termed to be ‘subsistence.’ Author’s main argument was that population was expanded at ‘geometrical’ rates, when subsistence was increasing at an ‘arithmetic’ ratio exclusively. Malthus strongly believed the man’s ability ...

The law of diminishing returns states that when one aspect in the manufacture of a product is increased while holding the other factors constant, there will be a reduction in the magnitude of the output in the short run. For instance, if a company ‘X’ increases one factor of production, say labor, a point will be arrived at whereby additional workers become less and less productive than a certain number of workers. This is accrued to increasing only factor of production disregarding the others. If for example the company increased all the factors of production, the level of production of the commodity would ...