Managerial Economics and Organizational

Running Head: MANAGERIAL ECONOMICS
MANAGERIAL ECONMICS
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2
MANAGERIAL ECONOMICS
The concept marginal returns state that, in a fabrication progression, if one production
unit upsurges, there will reach a time when one unit harvest will begin going down ceteris
paribus. The supplementary yield gained by a unit growth of the input will, in the long run,
become slighter than the production acquired by the preceding rise in the input unit (Blum &
Holling, 2017). For instance, for a farmer with one acre of land where he plants maize, in
addition to the land, other factors affect the output, including the quality of the seeds and the
quantity of labor that will be used. As the amount of fertilizer is increased, the number of
production increases.it would reach a point whereby the rise in compost leads to a decrease in
production since too much fertilizer is poisonous to plants (Ahmad & Subramanian, 2017).
A budget line is vital since it assists in the determination of the theory of consumer’s
equilibrium and is a crucial factor analysis of consumer behavior which shows the various blends
of two merchandises. The mixture can be purchased using a given amount of money and at
assumed prices. In the budget line, we have the indifference curves (Ahmad & Subramanian,
2017). The indifference curve shows the various combinations of goods that can be purchased at
a given level of income.an increase in an indifference curve means that there is an increased
level of satisfaction. A consumer will try to reach the highest combination to maximize their
comfort.
When a firm shuts down, this is not equivalent to exiting the market. Shutting down can
cut the variable costs to nil in the shut run. The corporation has, however, devoted it to
recompense its fixed costs (Surdu & Mellahi, 2017). Therefore, it produces at amount zero, and
it will operate at fatalities since it is making zero outputs. For instance, over a short time, firms
pay lease on an office or retail space and must do that regardless of ether, they are making profits
or not.