Costs LRAC LRMC From the figure above we can infer that over the output range shown production shows Increasing returns to scale Diminishing returns to labor Decreasing returns to scale Increasing returns to labor

Costs LRAC LRMC From the figure above we can infer that over the output range shown production shows Increasing returns to scale Diminishing returns to labor Decreasing returns to scale Increasing returns to labor

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 21P

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

Costs
LRAC
LRMC
Q
From the figure above we can infer that over the output range shown production shows
Increasing returns to scale
Diminishing returns to labor
Decreasing returns to scale
Increasing returns to labor

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