Class 12 Micro Economics - Chapter Production and Costs NCERT Solutions | Why is the short-run marginal cost curve
Why is the short-run marginal cost curve 'U'-shaped?
The long run marginal cost (LMC) and long run average cost (LAC) are U shaped curves. The reason behind them being U-shaped is due to the law of returns to scale. It is argued that a firm generallyn experiences IRS during the initial period of production followed by CRS, and lastly by DRS. Consequently, both LAC and LMC are U-shaped curves. Due to IRS, as the output increases, LAC falls due to economies of scale. Then falling LAC experiences CRS at Q1 level of output which is also called the optimum capacity. Beyond Q1 level of output, the firm
experiences diseconomies of scale and if the firm continues to produce
beyond Q1 level, the cost of production will rise.
More Questions From Class 12 Micro Economics - Chapter Production and Costs
- Q:-
What is the total product of input?
- Q:-
Why does the SMC curve cut the AVC curve at the minimum point of the AVC curve?
- Q:-
Let the production function of a firm be Q=5L1/2K1/2Q=5L1/2K1/2 Find out the maximum possible output that the firm can produce with 100 units of LL and 100 units of KK.
- Q:-
What does the average fixed cost curve look like? Why does it look so?
- Q:-
What do the long-run marginal cost and the average cost curves look like?
- Q:-
When does a production function satisfy decreasing returns to scale?
- Q:-
Explain the concept of a production function
- Q:-
Explain the relationship between the marginal products and the total product of an input.
- Q:-
At which point does the SMC curve intersect the SAC curve? Give a reason in support of your answer.
- Q:-
What is the law of variable proportions?
Popular Questions of Class 12 Micro Economics
- Q:-
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?
- Q:-
Explain market equilibrium.
- Q:-
Discuss the central problems of an economy.
- Q:-
What are the characteristics of a perfectly competitive market?
- Q:-
What do you mean by the budget set of a consumer?
- Q:-
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
-
- Q:-
When do we say that there is an excess demand for a commodity in the market?
- Q:-
What do you mean by the production possibilities of an economy?
- Q:-
How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
- Q:-
What is budget line?
Recently Viewed Questions of Class 12 Micro Economics
- Q:-
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?
- Q:-
The following table shows the total cost schedule of a competitive firm. It is given that the price of the good is Rs 10. Calculate the profit at each output level. Find the profit maximising level of output.
Output TC (Rs.) 0
1
2
3
4
5
6
7
8
9
105
15
22
27
31
38
49
63
81
101
123 - Q:-
What do you mean by ‘monotonic preferences’?
- Q:-
Suppose the price elasticity of demand for a good is – 0.2. If there is a 5 % increase in the price of the good, by what percentage will the demand for the good go down?
- Q:-
Using supply and demand curves show how an increase in the price of shoes affects the price of a pair of socks and the number of pairs of socks bought and sold.
- Q:-
Suppose the demand and supply curves of salt are given by:
(a) Find the equilibrium price and quantity.
(b) Now, suppose that the price of an input that used to produce salt has increased so, that the new supply curve is qs = 400 + 3p
How does the equilibrium price and quantity change? Does the change conform to your expectation?
(a) Suppose the government has imposed at ax of Rs 3 per unit of sale on salt. How does it affect the equilibrium rice quantity?
- Q:-
What do you understand by positive economic analysis?
- Q:-
What is the ‘price line’?
- Q:-
In what respect do the supply and demand curves in the labor market differ from those in the goods market?
- Q:-
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?
- All Chapters Of Class 12 Micro Economics
- All Subjects Of Class 12