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Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6?
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Diminishing marginal returns start to occur between units : Output Tot...
Diminishing Marginal Returns
Diminishing marginal returns occur when adding an additional unit of input results in a smaller increase in output than the previous unit. In other words, the marginal product of an additional unit of input decreases.
Given data
Output and total cost data is given for a production process as follows:
Output 0: Total cost Rs. 240
Output 1: Total cost Rs. 330
Output 2: Total cost Rs. 410
Output 3: Total cost Rs. 480
Output 4: Total cost Rs. 540
Output 5: Total cost Rs. 610
Output 6: Total cost Rs. 690
Identify the units where diminishing marginal returns start to occur
The correct answer is option (B) 3 and 4.
Explanation
Diminishing marginal returns occur when the marginal cost of production starts to increase. In other words, when the increase in total cost for each additional unit of output increases at an increasing rate.
To identify the point where diminishing marginal returns start to occur, we need to calculate the marginal cost of production.
- The marginal cost of producing the first unit is Rs. 330 - Rs. 240 = Rs. 90
- The marginal cost of producing the second unit is Rs. 410 - Rs. 330 = Rs. 80
- The marginal cost of producing the third unit is Rs. 480 - Rs. 410 = Rs. 70
- The marginal cost of producing the fourth unit is Rs. 540 - Rs. 480 = Rs. 60
- The marginal cost of producing the fifth unit is Rs. 610 - Rs. 540 = Rs. 70
- The marginal cost of producing the sixth unit is Rs. 690 - Rs. 610 = Rs. 80
From the above calculations, we can see that the marginal cost of production starts to increase after producing the third unit. Hence, the units where diminishing marginal returns start to occur are 3 and 4.
Diminishing marginal returns occur when adding an additional unit of input results in a smaller increase in output than the previous unit. In other words, the marginal product of an additional unit of input decreases.
Given data
Output and total cost data is given for a production process as follows:
Output 0: Total cost Rs. 240
Output 1: Total cost Rs. 330
Output 2: Total cost Rs. 410
Output 3: Total cost Rs. 480
Output 4: Total cost Rs. 540
Output 5: Total cost Rs. 610
Output 6: Total cost Rs. 690
Identify the units where diminishing marginal returns start to occur
The correct answer is option (B) 3 and 4.
Explanation
Diminishing marginal returns occur when the marginal cost of production starts to increase. In other words, when the increase in total cost for each additional unit of output increases at an increasing rate.
To identify the point where diminishing marginal returns start to occur, we need to calculate the marginal cost of production.
- The marginal cost of producing the first unit is Rs. 330 - Rs. 240 = Rs. 90
- The marginal cost of producing the second unit is Rs. 410 - Rs. 330 = Rs. 80
- The marginal cost of producing the third unit is Rs. 480 - Rs. 410 = Rs. 70
- The marginal cost of producing the fourth unit is Rs. 540 - Rs. 480 = Rs. 60
- The marginal cost of producing the fifth unit is Rs. 610 - Rs. 540 = Rs. 70
- The marginal cost of producing the sixth unit is Rs. 690 - Rs. 610 = Rs. 80
From the above calculations, we can see that the marginal cost of production starts to increase after producing the third unit. Hence, the units where diminishing marginal returns start to occur are 3 and 4.
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Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6?
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Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6?.
Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Diminishing marginal returns start to occur between units : Output Total cost 0. Rs.240 1 Rs.330 2. Rs.410 3. Rs.480 4. Rs.540 5. Rs.610 6. Rs.690 Options : A) 2 and 3 B) 3 and 4 C) 4 and 5 D) 5 and 6?.
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