# Production With One Slop Of The Product Curve Case Study

Decent Essays
2.8. Production With One Variable Input (Labour) And Law Of Diminishing Marginal Returns
This is the situation were capital is fixed and labour is variable, and only way to increase the output is by increasing the output. amt of labour(L) capital(K) total output(q) avg product(q/L) marginal product(dq/dL)
0 20000 0 0 0
1 20000 30 30 30
2 20000 50 25 20
3 20000 80 26.66666667 30
4 20000 100 25 20
5 20000 115 23 15
6 20000 120 20 5
7 20000 112 16 -8
8 20000 100 12.5 -12
9 20000 90 10 -10
10 20000 80 8 -10

The Slop Of The Product Curve (Raymond)

In chart A the output of Raymond increased with respect to the increase in labour till a maximum level were the raw materials and space to work is up to the level (120) and
Started
Raymond’s marginal product is positive as long as the output increases and it turns to negative. This happens because of adding a n extra worker more than the optimum level leads to negative marginal product of that labour.
And till the labour no 7 there is a small fluctuation in the production and when the marginal product curve touched average production curve the average tents to fall.
Outcome:
2.7.1 Law Of Diminishing Marginal Returns As the economic concept the Law Of Diminishing Marginal Returns also proved here. It is the data of Raymond’s one production unit’s information for one month. It repeats its cycle.

2.7.2Production with two variable input
In this concept two variables will be changing (capital and labour), were in Raymond they have done this by usage of machine and labour 1 2 3 4 5
1 20 40 55 65
So here also the economical concept Diminishing Marginal Returns proved.

2.7.Substitute Among Inputs
There is an equal substitution available in isoquant 2 units in capital reduction and one unit in labour addition will also provide us the same result. This proves the MRTS marginal rate of technical substitution.

2.7.1Cost of production (Raymond)
The cost of production to a company decides from the technology, method, prices of the factors of inputs and labour.
2.7.1.2 Opportunity cost of Raymond:
They are utilising the outside tailors to stich the cloth so that they can reduce the expense to employ a tailor. They are giving the space inside the showroom for the tailor so that the tailor will get work and the Raymond will get a rent.

Raymond cost output fixed cost variable cost total cost marginal cost avg variable cost avg total cost avg fc
0 50000 0 50000
1 50000 200000 250000 200000 200000 250000 50000
2 50000 225000 275000 25000 112500 137500 25000
3 50000 230000 280000 5000 76666.66667 93333.33333

## Related Documents

• Improved Essays

2 shows balance of trade between India and BRICS nations since 2001 to 2014. Export and import are both positive values and balance of trade is calculated by deducting import from the export. Fig 2 shows that import value is higher than the export value throughout the time period. Therefore the balance of trade is negative, which is also known as a trade deficit. Balance of trade shows consistently negative with slight deviation till 2010, after 2010 balance of trade rises exponentially in negative direction which means the import value rises exponentially also.…

• 916 Words
• 4 Pages
Improved Essays
• Great Essays

Therefore, if marginal cost is always less than average cost, then average cost will always be decreasing. Economies of scope Economies of scope is a term that refers to the reduction of per-unit costs through the production of a wider variety of goods or services. Economies of scope and economies of scale are conceptually similar. Whereas economies of scale for a firm primarily refers to reductions in the average costs associated with increasing scale of production for a single products type, economies of scope refers to lowering the average cost for a firm producing two or more products. How it Works: Let’s assume company XYZ strictly manufactures vaccum cleaners.…

• 2736 Words
• 11 Pages
Great Essays
• Great Essays

Dev. Diff. is the difference of standard deviations of average wages of workers in exporting firms and workers in domestic firms. A positive value of Std. Dev.…

• 1302 Words
• 6 Pages
Great Essays
• Improved Essays

This will increase demand for those products, therefore, the price will deflate”(Fred Arnold). Low wage earners make up more than 1/2 of the American workforce. If this majority of workers could actually afford the products, goods and services that are necessary then there wouldn’t be such high prices and taxes on goods to make up for the lack of income. Why is the fact that so many minimum wage workers are living in poverty being ignored? “raising the minimum wage 10 percent (say from \$7.25 to near \$8) would reduce the number of people living in poverty by 2.4 percent” ( Konczal,1).…

• 1571 Words
• 6 Pages
Improved Essays
• Improved Essays

In such case the product analyzed is an inferior good since by definition, buyers will purchase less of this good as their income increases. Similarly, the fact that the income elasticity of this case is negative, predicts that the product is an inferior good, because quantity demanded and income move in opposite directions for such products. In distinction to the three previous examples, the product in this case is considered elastic because the absolute value of its elasticity is greater than 1.0, 2.0 >…

• 997 Words
• 4 Pages
Improved Essays
• Improved Essays

After the increase in minimum wage, businesses maintain the difference in pay that previously existed in order for supervisors to be paid more than the people they supervise. Although increasing minimum wage will increase income for low wage workers, it will still reduce employment as a…

• 1185 Words
• 5 Pages
Improved Essays
• Improved Essays

Interest Rates Don’t.” has better execution in delivering the data,but commentary done in The Orange County Register editorial is better. They explain their point and use fact to back it up. When they compare two different points in our history one point is in the 1970’s the minimum wage increased the productive of works and in the 2000’s the minimum wage only grew a little leading the productivity to grew a little as well compared to the 1970’s data. “Since the early 1970s, median pay has risen by only 8.7 percent, after adjusting for inflation, while productivity has grown by 72 percent. Since 2000, the gap has become even bigger, with pay up only 1.8 percent, despite productivity growth of 22 percent.” The author in the New York Times effectively uses statistical facts to support his argument but does not show good commentary.…

• 1243 Words
• 5 Pages
Improved Essays
• Great Essays

Using a pattern search and genetic algorithm to maximize the total profit function, which show that the pattern search is better. Lin and Srivastava [18] developed a new two-warehouse inventory model with quantity discounts and maintenance actions under an imperfect production process. The objective is to minimize the total expected cost per unit time. An efficient algorithm was developed to help the manager in accurately and quickly determining the order policy. Taleizadeh et al.…

• 1669 Words
• 7 Pages
Great Essays
• Improved Essays

Looking at figure 1.a we see that after the Q4 2008 shock, the GDP level takes several quarters to recover the trend it previously had. The MA (1) coefficient is not significant at 10% as well as the MA (2) coefficient. As a result of this insignificance of estimates, we can infer that for this particular model, the random shocks at each point can be interpreted as mutually independent and come from the same distribution. The main difference between MA and AR models is that in MA models a shock affects the values of X only for the current period and q periods in the future; while in the AR models a shock affects infinitely the values of X since affects Xt , which affects Xt+1, which affects Xt+2 ,…

• 4164 Words
• 17 Pages
Improved Essays
• Great Essays

REDUCES UNEMPLOYMENT A stagnant economy may create a higher rates of unemployment and the consequent social misery. A relatively developed economy like the UK or US observes an average rise in productive capacity of 2-3% a year (Romer, 2011). So, even with slow growth of 1% or less, we may get a rise in extra capacity and increase in unemployment. BUDGET DEFICITS Economic growth is indispensable to improve government’s budget deficits. LIVING STANDARDS If the proper management is in the place, economic growth helps an rise in resources for key public services such as education and health care.…

• 2288 Words
• 10 Pages
Great Essays