Assume that the marginal product of each input employed by Microsoft depends only on the quantity of that input employed (and not on the quantities of other inputs), and that diminishing marginal returns hold for each input. Explain why Microsoft’s isoquants must be convex if these assumptions hold.
Answer to relevant QuestionsIsoquants are downward sloping, nonintersecting, and convex. Explain the basis for each of these characteristics.In the commuting example in the text, we assumed that the car in question got 25 miles per gallon if driven at 60 mph and 26 miles per gallon if driven at 55 mph. If the car gets 1 more mile per gallon for each ...Using the data from Question, construct the following relationships: (a) the average amount of labor used per unit of output at each level of output, and (b) the additional amount of labor required for each additional unit ...Why do we assume that the prices of inputs are constant when we draw a firm’s cost curves? How does a change in the price of an input affect the AC and MC curves?“If Conagra is a competitive firm, it will never operate at an output where its average total cost curve is downward sloping.” True or false? Explain.
Post your question