Answer to Question #47616 in Microeconomics for anand




 relationship between the law of diminishing return and three stages of production.
Economists recognize three distinct stages of production, which are defined by a concept known as the law of diminishing marginal returns. This law holds that as you add more workers to the production process, output will increase -- but the size of that increase will get smaller with each worker you add. At some point, if you keep adding workers, your output may even start shrinking. The idea of the three stages of production helps companies set production schedules and make staffing decisions.  
Stage one is the period of most growth in a company&#039;s production. In this period, each additional variable input will produce more products. This signifies an increasing marginal return; the investment on the variable input outweighs the cost of producing an additional product at an increasing rate.  
Stage two is the period where marginal returns start to decrease. Each additional variable input will still produce additional units but at a decreasing rate. This is because of the law of diminishing returns: Output steadily decreases on each additional unit of variable input, holding all other inputs fixed.  
In stage three, marginal returns start to become negative. Adding more variable inputs becomes counterproductive; an additional source of labor will lessen overall production. For example, hiring an additional employee to produce cans will actually result in fewer cans produced overall. This may be due to factors such as labor capacity and efficiency limitations. In this stage, the total product curve starts to trend down, the average product curve continues its descent and the marginal curve becomes negative.
<p>consumption is a basic human activity and it is very essential for the survival of any human being.</p><p><em><strong><span style="font-size: 14pt;">utility</span></strong></em><em><strong><span style="font-size: 14pt;">-</span></strong></em></p>
<p>consumption is a basic human activity and it is very essential for the survival of any human being. it, in fact, continues from birth to death. we undertake consumption for the satisfaction of our wants, which can be both physical and psychological. in order to have a proper understanding of the process of consumption we must understand the following words:</p>
<p><em><strong><span style="font-size: 14pt;">(i) want:</span></strong></em></p>
<p>want is a feeling of mental pain, or an experience of lack of satisfaction, which a person feels for not getting a thing. this can he both for physical as well as psychological reasons. if the thing or commodity, in the absence of which we are feeling the pain, is received then our want is fulfilled, that is to say, the feeling of pain disappears. wants lead to an action designed to provide satisfaction. wants have several characteristics.</p>
<p><strong>the first</strong> is that they are unlimited in number. even as we satisfy some of the wants, we get accustomed to new wants.</p>
<p><strong>the second</strong> characteristic is that they are competitive in nature. wants compete with each other for limited resources which a person possesses. this gives rise to choice making as we have already seen in an earlier chapter.</p>
<p><strong>the third </strong>characteristic is their complementarity. it means that many wants go together. one gives rise to another and the satisfaction of one is not complete without satisfying the other also.</p>
<p><strong>the fourth</strong> characteristic of the wants is their recurrent nature. it implies that from the first unit of consumption, but the utility received from the second unit of consumption is 14 only and the total utility for 2 units, therefore, becomes 15 + 14 = 29. the third unit of consumption gives us a utility of 11 only and the total utility becomes 29 + 11 = 40. in this way, the marginal utility goes on diminishing and it finally reaches zero also for the 10th unit of consumption. this means that this commodity is no longer is a position to given any satisfaction. this is also called the <strong>point of satiety</strong>. if somebody still insists on taking an additional unit, then the marginal utility becomes negative and the total utility starts falling. we also find that the total utility is nothing but a summation of individual utilities of each successive unit, and the marginal utility is nothing but an addition to the total utility. we can also show it as follows.</p>
<p>                                           </p>
<p>                                                   <strong>mun = tun - tun-1</strong></p>
<p>where,</p>
<p>mun =  marginal utility of n units</p>
<p>tun =  total utility of n units </p>
<p>tun-1 =  total utility of n-1 units</p>
<p> </p>
<p>if we analyse the above situation we can say, that as we go on taking some units of consumption, our wants go on being partially satisfied. therefore, the intensity of want goes on diminishing and accordingly, the satisfaction also goes on diminishing. after 9 units our want has been fully satisfied and therefore, the next unit would not give any satisfaction and the utility derived from the next unit becomes '0' and after that it becomes negative or in other words the utility becomes disutility:</p>
<p>the above phenomenon is called the <strong>law of diminishing marginal utility</strong>, which can be stated as follows:</p>
<p> </p>
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<p><strong>note -  </strong></p>
<p>the law of diminishing marginal utility was first given by a german writer <strong>hermann heinrich gossen</strong> in the middle of <strong>nineteenth century</strong>. it is, therefore, also called as <strong>'the first law of gossen'</strong>. similarly, the law of equimarginal utility is called <strong>'the second law of gossen'. </strong></p>
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<p> </p>
<p><em><strong>“as we go on consuming more than one unit of consumption, the utility derived from each successive unit of consumption goes on diminishing."</strong></em></p>
<p> </p>
<p>here, it needs to be clarified that marginal utility would be diminishing but at what rate it would be diminishing, is not certain. in the above table we find that sometimes it falls by 1, sometimes by 2 and sometimes by 3 units. it is also to be noted that, it is possible in some cases that initially the marginal utility is increasing, but the phenomenon of increasing marginal utility would be restricted to only first few units of consumption. after that, the application of the law of diminishing marginal utility is inevitable.</p>
<p> </p>
<p><span style="font-size: 14pt;"><em><strong>assumptions of the law -</strong></em></span></p>
<p>the law of diminishing marginal utility is based on the following assumptions.</p>
<p>1. all units of consumption of the commodity are homogeneous in nature i.e. they are exactly the same in size, quantity, quality etc.</p>
<p>2. there is no time gap between the different units of consumption i.e. the process of consumption continues without a time lag.</p>
<p>3. the taste and choice of the consumer for the commodity does not change.</p>
<p>4. this law also assumes that the marginal utility of money is constant (although some economists do not agree with it).</p>
<p> </p>
<p> </p> applying and factorization, we get, also changing by reversing n and dnote: - try to factorize that term which help in reducing expression. in a perfectly competitive firm, ar is constant due to this, mr
is also constant and is equal to ar
in a monopoly firm, ar is reducing due to this, mr must also be
decreasing but faster than ar this is why mr is always less than ar
in non-competitive markets price elasticity of demand is -3price is rs 10quantity is 100 unitschange in price is 50%ed = p/q *change in q/change in p-3 = 10/100 * change in q / 50-3 = change in q/500change in q = 500*3 = 1500 we are asked to complete the sentence. [readmore]a law reliably predicts the behavior of matter, while a theory provides an explanation for that behavior. following with the same question column a answer (1) no-new company is formed. (c) absorption (2) 'goodwill or capital reserv (a) purchase method. (3) scheme of amalgamation (d) reqires approval of high court (4) transferer company (e) to be liquidated (5) profit on realisation (b) transferred to realisation a/c direction: a word and number arrangement machine when given an input line of word and numbers rearranges them following a particular rule in each step. the following is an illustration of input and rearrangement. input: politics 61 policy 116 partner 93 role 45 clear 27 38 point step i: role politics policy 116 partner 93 45 clear 27 38 point 61 step ii: role clear politics policy partner 93 45 27 38 point 116 61 step iii: role clear partner politics policy 93 45 38 point 27 116 61 step iv: role clear partner politics policy 93 38 point 45 27 116 61 step v: role clear partner politics point policy 93 38 45 27 116 61 step v, is the last step of the above arrangement as the intended arrangement is obtained. as per the rule followed in the given steps find out the appropriate steps for the given input. input: energy 54 78 place 23 issue 211 145 flat rent taxi 17in step iii, what is the difference between fifth element from left and second element from right? your question is useful for the link and for other purposes. given statement is true.