It is possible to have diminishing marginal returns to a single factor of production and constant...

It is possible to have diminishing marginal returns to a single factor of production and constant returns to scale at the same time. Discuss.

A.

The statement is true. As long as only one input has diminishing marginal returns, it is possible to have constant returns to scale.

B.

The statement is false. If an input exhibits diminishing marginal returns, then doubling that input will result in less than double the output.

C.

The statement is false. The terms 'marginal returns' and 'returns to scale' are interchangeable. Therefore, if the factors of production have diminishing marginal returns, then there are decreasing returns to scale.

D.

The statement is true. Diminishing marginal returns to a single factor applies to the short run when all other inputs are held fixed. On the other hand, returns to scales applies to the long run when all inputs can be increased.

Expert Solution

Please give an up vote if you like my explanation and answer ....

Now first let us understand that diminishing marginal returns and constant returns to scale are two very different concepts . Diminishing marginal returns to a single factor occurs when other factors are constant or fixed in units . So here other factors are constant and only the variable factor is increased which results in lower marginal product over time .

Now constant returns to scale means all factors are increased in same proportion and the output gets increased in that proportion only . While each factor individually exhibits diminishing marginal returns , output may more than double, less than double, or exactly double when all the factors are doubled ( which gives rise to 3 different types of scales ) . So in returns to scale no input is fixed , all increased in same proportion .

Diminishing marginal returns is a short run phenomena , returns to scale is a long run phenomena .

So yes both are quite possible together .

Answer : D. The statement is true. Diminishing marginal returns to a single factor applies to the short run when all other inputs are held fixed. On the other hand, returns to scales applies to the long run when all inputs can be increased.

Rahul Sunny answered 8 months ago

8. Can a production function have diminishing marginal returns to a factor of production and constant...

8. Can a production function have diminishing marginal returns to a factor of production and constant returns to scale simultaneously? Why or why not?

a) Define Marginal Product; what is the logical meaning of 'Diminishing Marginal Returns' to a single...

a) Define Marginal Product; what is the logical meaning of 'Diminishing Marginal Returns' to a single variable factor of production ? b) What is the behaviour of Marginal product (MP) of a factor of production when Average Product (AP) is decreasing with the level of production ?

Explain the principle of the cost of production, Diminishing Marginal Productivity , Diminishing Marginal Utility in...

Explain the principle of the cost of production, Diminishing Marginal Productivity , Diminishing Marginal Utility in microeconomics. ( minimum a paragraph for each)

Assume diminishing marginal product, constant returns to scale and perfect competition. Draw short-run marginal cost, average...

Assume diminishing marginal product, constant returns to scale and perfect competition. Draw short-run marginal cost, average total cost and average variable cost curves for the firm. Identify market prices that induce entry, exit and shutdown on this graph. Draw the short-run supply curve for the market. Describe the relationship between the short-run supply curve for the market and the firm’s cost curves. Draw the long-run supply curve.

Microeconomics Marginal Productivity and the Law of Diminishing Marginal Returns You have recently been hired to...

Microeconomics Marginal Productivity and the Law of Diminishing Marginal Returns You have recently been hired to manage a movie theater. You observe that there are many customers waiting around the concession area to buy snacks. You also observe that there is only one clerk working the counter. This employee has to do everything from get the popcorn going, stocking condiments and supplies, changing the soda canister when the syrup runs out for fountain drinks, helping customers, fill orders, collect cash,...

The law of diminishing marginal returns starts: * a) Before minimum marginal cost b) After minimum...

The law of diminishing marginal returns starts: * a) Before minimum marginal cost b) After minimum marginal cost c) After minimum MPP d) When capital is a variable input Which of the following statement is not correct: Average variable costs of production a) Will fall than rise as more is produced. b) has a minimum c) graphs as a U-shaped curve. d) falls as long as output is increased. If marginal cost is above average total cost, then: * a)...

A cliché that sums up the concept of diminishing marginal returns/increasing marginal costs is: Question 8...

A cliché that sums up the concept of diminishing marginal returns/increasing marginal costs is: Question 8 options: Question 33 (5 points) Which of the following are examples of price discrimination (select all that apply): Question 33 options: A restaurant charges "senior citizens" 15% percent lower prices than other customers. An airline charges more for first class seats than for economy class seats. An online retailer charges different prices based on shipping costs. A theater charges lower prices for matinees (movies...

How do specialization economies and diminishing marginal returns affect the shape of a firm’s short-run marginal...

How do specialization economies and diminishing marginal returns affect the shape of a firm’s short-run marginal cost curve? Provide a complete explanation in support of your response.

In that law, we see increasing returns at the start of production, production then exhibits diminishing...

In that law, we see increasing returns at the start of production, production then exhibits diminishing returns until it peaks, and then will exhibit negative returns if we attempt to push beyond that. Now, think about your work day - it could be a work day at your place of employment or a work day of school activities or a workday at home if you are a homemaker. Provide two examples of how your work day exhibits increasing returns, diminishing...

What is the law of diminishing returns in production and how it affects the level of...

What is the law of diminishing returns in production and how it affects the level of output? You could use the marginal product of labour and the marginal product of capital. Topics are related to first half of the course and include theories and practices. Write an essay at least 2,000 words.

Question