Posted: September 13th, 2017

Marginal Product and Marginal Cost

Marginal Product and Marginal Cost
Order Description
Week 4 Hand-in Assignment

Address the following:

1. Construct a numerical example to show that as marginal product (MP) rises, marginal cost (MC) falls. Explain your answer and use tables and graphs to illustrate.

2. If marginal product is continually declining, what does marginal cost look like? Explain your answer using graphs and numerical illustrations to support your arguments.

3. If the ATC curve is continually declining, what does this imply about the MC curve? Explain your answer and use graphs and numerical illustrations to support your arguments.

Please, see the attached files for the required readings and explanation of the topic.

Master of Science in Management

Economics for Management

Module learning outcomes
On completion of the module, students will be able to:
• Demonstrate understanding of economic theory and its relevance to business management
• Apply economic tools to the analysis of complex business issues
• Critically evaluate the methodologies used in particular economic analyses
Week 4: Production and cost analysis

Learning objectives for Week 4
This week you will learn about the following topics:
• Production theory
• Production estimation
• Innovation
• Cost theory
• Cost estimation
Introduction
This week you will examine the basic production function and the question of how much labour and capital a firm needs to produce a given level of output. You will explore quantitative techniques for estimating production as well as the effect of innovation on the production function of a firm. You will also analyse the nature of costs of production and how to derive cost curves. Finally, you will examine various techniques for estimating costs of the firm.

The recorded lecture begins with an introduction to the production function. The week concludes with a discussion of techniques for cost estimation. You can play each section as many times as you like and also read the text version

The textbook readings cover the key learning objectives at a reasonably challenging level.

The advanced math concept guide for this week is intended to provide you with a more detailed explanation of the concepts that are to be covered in this week. Even if you have previously encountered such concepts, it is recommended that you review the concept guide for reinforcement.

The textbook publisher provides useful diagrams and summaries to help you review the main points you have covered during the week. Go to the publisher Web page below to download the applicable chapters for each week.
http://www.oup.com/us/companion.websites/9780199811786/student/?view=usa

For the Assessment, you will discuss a question online and also complete a Hand-in Assignment demonstrating that you can apply some of the techniques you have studied.

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Master of Science in Management

Economics for Management

Reading
Textbook

Salvatore, D. (2012) Managerial economics in a global economy. 7th ed. New York: Oxford University Press.

(Please note that the references to these readings can be found in the Lecture Notes text under the headings of the topics to which they relate.)
• Production theory
Pages 268?272 in Chapter 7 analyse the basic production function that the firm must address with regards to the levels of labour and capital.
• Production estimation
Pages 273?294 in Chapter 7 outline and discuss the approach to estimating production for a firm with one or two variable inputs. The reading also explores the Law of Diminishing Returns and its relation to production.
• Innovation
Pages 298?306 in Chapter 7 discuss the meaning and importance of the innovation process with regards to the production of the firm. Product and process innovation are explained, and the Open Innovation Model is examined for future significance.
• Cost theory
Pages 318?345 in Chapter 8 examine the nature of costs of production and the differences between accounting and economic costs. Total, average, and marginal cost curves are explained for both the short-run and the long-run.
• Cost estimation
Pages 346?353 in Chapter 8 provide a look at the methods for estimating costs for a firm and explore plant size, economies of scale, economies of scope, and the learning curve. Consideration is also given to supply chain management and break-even analysis.

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