Econ 8500 Spring 2019- Answers Harvard Case Solution & Analysis

Question 4

True

The law of diminishing marginal product states that with increasing input variable; the total output increases with the decreasing rate. The statement holds truth with a fixed input and a variable input. However, when considering, there is no law of diminishing marginal product, it can be theoretically said that cows can milk the entire world.

Question 5

True

In the short run, one of the two inputs is fixed. Here in this situation, the labour capital is fixed. As the labour cost will increased then the total cost of the firm will also increase due to lawx marginal productivity of labour. Therefore, it also minimizes the profit rather than maximizing it. (Riley, n.d.)

Total output

                                                                                                                            Labour            

Question 6

False

In a perfectly competitive market, the number of firms are not determined, as there cannot be a fixed number of firms working in a perfectly competitive market. As the barrier to entrance and the exit is the variation in the number of firms.

Shorter Problems: Section II

Question 1

Question 2

Question 3

Longer Question

Question 1

B)

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