Macroeconomics and Microeconomics - MicroFB Essay

Macroeconomics and Microeconomics - MicroFB - Essay ExampleFor example, when a 20% increase in vehicles results from a 20% increase in investment on manufacturing equipments, then the firm could be experiencing constant returns to scale. Question three Economic profit constitutes to the difference between total revenue and luck follow. For instance, Pesso invests $1,000 to begin a business in a particular year which she earns $1,200 in profits. But if she had not begun the business she could have earned a honorarium of $4,500. In such a case, the economic loss is $250 (1,200 1000 450). Question four Law of diminishing fringy returns states that as new workers continue to increase, the marginal product of any additional worker will at some instant be lower than that of the previous worker. For instance, if a company employs workers to produce its commodities, at some point in time each additional worker will provide lower output than the previous worker, if all other factors bre athe unchanged. Question five Marginal product of labor refers to the change in output resulting from hiring an additional worker. For example, if a pizza restaurant with three employees makes 100 pizzas in a day and 120 pizzas with four employees, the marginal product of labor is 20 pizzas (120 100). ... For instance, a firm that has spent $10 million acquiring a machine which is not yet installed has to consider the $10 million sunk because it female genital organnot recover the money. Question eight The principal-agent problem refers to the conflict of interest that go ons when an agent is hired by a principal to conduct specific tasks that are extremely costly but in the best interest of the principal. For example, the problem will occur when a company hires a valuation agency to set a credit rating and the agency is objective to give a higher rating than that which is deserved in fear of losing future contracts. Question nine Equilibrium price refers to the marketplace pr ice where demand of a good equals the supply. For example, when a market is able to produce 100 pizzas which exactly equal the demand of the pizzas, the price at which the pizzas are offered is the equilibrium price. Question ten Tragedy of the commons can be defined as the dilemma that arises from the situation in which many individuals, working independently and only consulting own interest, will eventually diminish a shared scarce resource even when it is apparent that the action is not in the long-term benefit of all. For instance, if the activities of a mining company affect a natural spring that is the source of water for local people and animals, the occurrence is a tragedy of the commons. PART THREE Question one Economies and diseconomies of scale refer to two completely opposite models. Economies of scale occur at a point when the quantity produced by a firm offers the firm the low cost advantage and the firm earns the minimum cost advantage. Conversely, diseconomies of sca le occur at a point when the firm produces less than the amount of the input costs and the