(a) State the relationship between average cost and marginal cost using a diagram.
(b) State the law of variable proportions. Give two assumptions of this law.
(c) Derive the long run average cost curve from short run average cost curve.
CLASS 12TH ICSE ECONOMICS SAMPLE PAPER 2018-19
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Law of Variable Proportions occupies an important place in economic theory. This law is also known as Law of Proportionality.
Keeping other factors fixed, the law explains the production function with one factor variable. In the short run when output of a commodity is sought to be increased, the law of variable proportions comes into operation.
Therefore, when the number of one factor is increased or decreased, while other factors are constant, the proportion between the factors is altered. For instance, there are two factors of production viz., land and labour.
Hope this helps you...
Law of Variable Proportions occupies an important place in economic theory. This law is also known as Law of Proportionality.
Keeping other factors fixed, the law explains the production function with one factor variable. In the short run when output of a commodity is sought to be increased, the law of variable proportions comes into operation.
Therefore, when the number of one factor is increased or decreased, while other factors are constant, the proportion between the factors is altered. For instance, there are two factors of production viz., land and labour.
Hope this helps you...
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