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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When does a production function satisfy decreasing returns to scale?
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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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Explain the relationship between the marginal products and the total product of an input.
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The following table gives the total product schedule of labour. Find the corresponding average product and marginal product schedules of labour.
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What are the average fixed cost, average variable cost and average cost of a firm? How are they related?
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What is the law of diminishing marginal product?
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What do the long-run marginal cost and the average cost curves look like?
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Why is the short-run marginal cost curve 'U'-shaped?
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What are the average fixed cost, average variable cost and average cost of a firm? How are they related?
Popular Questions of Class 12 Micro Economics
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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?
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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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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
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How is the optimal amount of labor determined in a perfectly competitive market?
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What is the value of the MR when the demand curve is elastic?
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How are the equilibrium price and quantity affected when?
(a) Both demand and supply curves shift in the same direction?
(b) Demand and supply curves shift in opposite directions?
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Comment on the shape of MR curve in case when TR curve is a
(a) Positively sloped straight line
(b) Horizontal straight line
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What do you understand by normative economic analysis?
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If the monopolist firm of Exercise 3 was a public sector firm. The government set a rule for its manager to accept the government fixed price as given (i.e. to be a price taker and therefore behave as a firm in a perfectly competitive market). And the government has decided to set the price so that demand and supply in the market are equal. What would be the equilibrium price, quantity and profit in this case?
- Q:-
Distinguish between microeconomics and macroeconomics.
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Suppose a consumer can afford to buy 6 units of good 1 and 8 units of good 2
if she spends her entire income. The prices of the two goods are Rs 6 and Rs 8
respectively. How much is the consumer’s income? - Q:-
Discuss the subject matter of economics.
- Q:-
When do we say that there is an excess supply for a commodity in the market?
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