BUECO5903 Business Economics - Microeconomics Assignment

Question 3:

(a) Assuming a constant wage rate, illustrate and explain, using a diagram, how a firm’s marginal costs of production are at a minimum when its marginal product is at a maximum; (2.5 marks for the diagram plus 2.5 marks for the explanation)
(b) Illustrate and explain using a diagram how a firm’s long-run average cost curve comes into existence from a multi-plant operation; (2.0 marks for the diagram plus 2.0 marks for the explanation)
(c) Identify and describe the significance of the various portions of this diagram. (1 mark)