What is the law of diminishing returns? Why does marginal product eventually diminish? b. Explain the relationship between marginal product and average product. Lin’s makes fortune cookies. Anyone can make and sell fortune cookies, so there are dozens of producers. All fortune cookies are the same and buyers and sellers know this fact. In what type of market does Lin’s operate? What determines the price of fortune cookies? What determines Lin’s marginal revenue? d. What is the shape of the AFC curve and why does it have this shape?
What is the law of diminishing returns? Why does marginal product eventually diminish? b. Explain the relationship between marginal product and average product. Lin’s makes fortune cookies. Anyone can make and sell fortune cookies, so there are dozens of producers. All fortune cookies are the same and buyers and sellers know this fact. In what type of market does Lin’s operate? What determines the price of fortune cookies? What determines Lin’s marginal revenue? d. What is the shape of the AFC curve and why does it have this shape?
Chapter12: Firms In Perfectly Competitive Markets
Section: Chapter Questions
Problem 6P
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What is the law of diminishing returns? Why does marginal product eventually
diminish?
b. Explain the relationship between marginal product and average product.
Lin’s makes fortune cookies. Anyone can make and sell fortune cookies, so there
are dozens of producers. All fortune cookies are the same and buyers and sellers
know this fact. In what type of market does Lin’s operate? What determines the
price of fortune cookies? What determines Lin’s marginal revenue?
d. What is the shape of the AFC curve and why does it have this shape?
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