Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | What does the average fixed cost curve l
What does the average fixed cost curve look like? Why does it look so?
The short run marginal cost (SMC), average variable cost (AVC) and short run average cost (SAC) curves are all U-shaped curves. The reason behind the curves being U-shaped is the law of variable proportion. In the initial stages of production in the short run, due to increasing returns to labour, all the costs (average and marginal) fall. In addition to this in the short run MP of labour also increases, which implies that more output can be produced by per additional unit of labour, leading all the costs curves to fall. Subsequently with the advent of constant returns to labour, the cost curves become constant and reach their minimum point (representing the optimum combination of capital and labour). Beyond this optimum combination, additional units of labour increase the cost, and as MP of labour starts falling, the cost curve starts rising due to decreasing returns to labour.
More Questions From Class 12 Micro Economics - Chapter Production and Costs
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What is the total product of input?
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Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
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Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.
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What do the long-run marginal cost and the average cost curves look like?
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When does a production function satisfy decreasing returns to scale?
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Explain the relationship between the marginal products and the total product of an input.
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Explain the concept of a production function
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Why is the short-run marginal cost curve 'U'-shaped?
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At which point does the SMC curve intersect the SAC curve? Give a reason in support of your answer.
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What is the law of variable proportions?
Popular Questions of Class 12 Micro Economics
- Q:-
What would be the shape of the demand curve so that the total revenue curve is?
(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
- Q:-
Explain market equilibrium.
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Discuss the central problems of an economy.
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What are the characteristics of a perfectly competitive market?
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What do you mean by the budget set of a consumer?
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From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
4
5
6
7
8
9
Marginal
Revenue
10
6
2
2
2
0
0
0
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- Q:-
When do we say that there is an excess demand for a commodity in the market?
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What do you mean by the production possibilities of an economy?
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How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
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What is budget line?
Recently Viewed Questions of Class 12 Micro Economics
- Q:-
What do you understand by positive economic analysis?
- Q:-
Suppose the price at which the equilibrium is attained in exercise 5 is above the minimum average cost of the firms constituting the market. Now if we allow for free entry and exit of firms, how will the market price adjust to it?
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What is the supply curve of a firm in the long run?
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What will happen if the price prevailing in the market is?
i. Above the equilibrium price
Ii. Below the equilibrium price
- Q:-
How does technological progress affect the supply curve of a firm?
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What do you mean by a normal good?
- Q:-
What would be the shape of the demand curve so that the total revenue curve is?
(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
- Q:-
A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?
- Q:-
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
4
5
6
7
8
9
Marginal
Revenue
10
6
2
2
2
0
0
0
-
- Q:-
How is the equilibrium number of firms determined in a market where entry and exit is permitted?
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