You may complete the following
You may complete the following table. Units of labour Totalproduction (units) Average production Marginal production 0 0—————- ——————— 1 2 2 5 3 9 4 12 5 14 6 15 715 8 14 Increasing returns to scale occur when the range of unitsof variable factor is from A. 1 to 3 B. 4 to 6 C. 6 to 8 D. 3 to5
2. Microeconomics
Answer:
|
Units of variable factor Labour ( input) L |
Total Product TP( units) |
Average Product (AP) units TP/L |
Marginal Product (MP) units ∆TP/∆L |
|---|---|---|---|
| 1 | 2 | 2 | — |
| 2 | 5 | 2•5 | 3 |
| 3 | 9 | 3 | 4 |
| 4 | 12 | 3 | 3 |
| 5 | 14 | 2•8 | 2 |
| 6 | 15 | 2•5 | 1 |
| 7 | 15 | 2•1 | 0 |
| 8 | 14 | 1•7 | -1 |
In the above production function ,we find that —-
-Upto 3 units of labour ,TP increases at increasing rate and MPincreases
-Upto 6 units of labour MP start diminishing and TP increases atdiminishing rate
-At 7 th unit, Tp is maximum while MP is zero
-Afterthat, Tp decrease,and MP is negetive
#Increasing returns to scale
In the long run, Output can be increased by increasing allfactors of production,that is fixed as well as variable.
When output increases by more than proportional increase ininputs ,it is called increasing returns to scale.
For example—
Input Increase by 10%
Output increase by 15%
It is called increasing returns to scale
See the graph——
As asked in question, i have marked points A,B,C,D to depictIRS( increasing returns to scale)
# Micro Economics——
It is the study of individuals, households and firms in decisionmaking and allocation of resources.
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