Production Stages and Cost Analysis
1. Why is productivity in the use of variable input most optimal in the 1st stage of the total product compared to the 2nd stage?
R. Because in the 1st stage, there is a greater yield of total product due to the use of variable inputs. This rise is due to production increases, allowing competition in the market. In the 2nd stage, production continues to grow, but demonstrated activities do not show the same advantage as in the 1st.
2. Why does total productivity decrease in the 2nd stage compared to the 1st?
R. Total output decreases because the 1st step is always to increase production. In the 2nd stage, maintaining that level of production methods leads to a resting level.
3. What does it mean when the average product is at its maximum?
R. It means the highest level of production is reached, and therefore the conditions for the company’s competitiveness are perfect.
4. If the total output increases, does the average fixed cost tend to decrease?
R. Yes, because as the quantity (Q) increases, the level of production begins to decline, and the average fixed cost is optimal when production reaches its maximum.
5. At what point in total product performance may the average fixed cost go up?
R. In the third stage of the production process, when production begins to decline, the average fixed cost tends to rise.
6. What does it signify when the marginal product (Q) is 0?
R. It signifies that total output reaches a maximum, and the law of marginal returns changes. When the marginal product is 0, it indicates a trend of decreasing productivity of the variable input.
7. What does it mean when the marginal product becomes negative? Describe the total product curve.
R. It means the product reaches its maximum and starts decreasing. This is known as the law of diminishing returns. Adding additional variable inputs to production leads to a decrease in total output, making variable costs unproductive.
8. Why does a descending stage occur in the average product?
R. This descent occurs because the utilization of variable inputs does not generate the same use as in the 1st stage.
9. What relationship exists between the behavior of the average cost during its descent and the total product?
R. The relationship is that in the descending phase of the average cost, there is a stability in the total production where the average cost drops to a minimum variable cost per unit produced.
10. What is the relationship in step ‘d’ between average cost in its growing stage and total product?
R. The higher the average cost, the lower the total product produced.
11. What is the relationship between the growing phase of average cost and total output?
R. A lower average cost leads to a higher total output, which is beneficial for the company and increases profits.
14. Why does the marginal product become 0 in the third stage of the total product?
R. Because total output reaches its maximum value, activating the law of diminishing marginal productivity with a negative trend in variable input yield.
15. Explain why an increasing marginal cost is induced.
R. This is due to production methods associated with a comprehensive performance level where the maximum capacity advantage of incorporating the input variable is reached. The increasing behavior contributes to the increase in output per unit.
16. Is the increasing marginal cost behavior favorable to the employer?
R. Yes, because it allows analyzing changes in total cost production methods by using additional variable units of production factors, thus increasing production per unit.
17. What is the relationship between the marginal product curve and marginal cost?
R. In the first stage, marginal production methods increase. In the second stage, productivity growth begins to slow and enters a state of stabilization. In the third stage, the curve descends, decreasing production. Marginal cost may initially be reduced, but in the second phase, these costs begin to increase from a certain point, and finally, in the third stage, a growth curve is observed. The relationship is: as marginal productivity decreases, marginal costs will grow.
18. What does the lowest point of marginal cost signify? Is it favorable for the company?
R. The lowest point of marginal cost signifies that the total product is in its nascent stage and peaked, with minimal costs. It is favorable for the business.
19. When is the average fixed cost at its lowest?
R. As production increases, the average fixed cost per unit decreases, reaching its lowest point.
20. Briefly describe the three stages of total, average, and marginal product.
R. In the first stage, the marginal product increases. In the second stage, the marginal product begins to decrease progressively until it reaches 0. In the third stage, the marginal product of any additional unit becomes negative.
The average product is calculated by dividing the output level by the amount of factor used. The greater the output, the greater the average product of labor.
The total product curve rises and grows progressively in the first stage, reaches its peak in the second stage, and drops in the third stage.