production and costs

Production & Costs Discussion The theory of the firm seeks to understand what motivates firms to make the operating decisions that they do. Focusing on production and costs (the cost of producing a given quantity of output), provides the necessary background information to do that. Assignment Objective Explain diminishing returns/relationship between average total cost and marginal cost using a real-world explain.  Differentiate between the three types of cost.  Directions Pick ONE of the three options… Option 1:  What do economists mean by “diminishing returns” to an input? What causes diminishing returns? Have you ever observed this principle at work in a job you’ve had? Describe how you’ve experienced this concept in the real world.

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