In: Economics

# Marginal Costs. Discuss how the marginal cost declines as the marginal product of a variable input...

Marginal Costs. Discuss how the marginal cost declines as the marginal product of a variable input increases. Please integrate the Bible passages in your discussion.

## Solutions

##### Expert Solution

Marginal cost is the cost for producing an extra or additional unit of product or output. Marginal cost and marginal product are inversely related to each other. As marginal product increases the marginal cost will decline and vice versa. The relationship between marginal cost and marginal product can be explain through the law of diminishing returns. This law states that, as one continue to add resources or input to production, the cost per unit will first decline. This happens due to economies of scale and law of diminishing return.

For example, There is a 1 machine which produces 10000 chocolates if we employ 10 labour to produce . The cost and number of machine will be fixed and variable input will increase When you employ one labour his/her productivity will be more and marginal cost of production will be less.The marginal cost will decline till 10000 chocolate's production and marginal product of a variable input increases.

## Related Solutions

##### How does the marginal product of an input change as less of that input is used?
How does the marginal product of an input change as less of that input is used?
##### Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs...
Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs of production. Do they affect each other, or does one cause the other? Are there possible situations where the marginal costs of production do not rise? If so, what does that mean for the marginal product of the inputs or the price of these inputs? (approximately 1 - 3 paragraphs).
##### Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs...
Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs of production. Do they affect each other, or does one cause the other? Are there possible situations where the marginal costs of production do not rise? If so, what does that mean for the marginal product of the inputs or the price of these inputs?
##### Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs...
Explain the relationship between the marginal product of variable inputs (like labor) and the marginal costs of production. Do they affect each other, or does one cause the other? Are there possible situations where the marginal costs of production do not rise? If so, what does that mean for the marginal product of the inputs or the price of these inputs? 2-3 paragraphs please
##### 1a)you are given that the marginal product of input X is MPx and that of input...
1a)you are given that the marginal product of input X is MPx and that of input Y is MPy, what is the marginal rate of technical substitution of Xand Y b)Given that the prices of X and Y are Px and Py, what is the condition for cost of minimizing input combination? c)Explain the difference between the concept of marginal physical product and the concept of returns to scale. d) in oligopoly, game theory can be used to explain the...