Question

URGENT

Explain three stages of short period production function when only two factors are being employed. . B. Why do we study economics?

What positive and negative externalities are created by ship travel in India? What would be the consequence of shifting away from sea travel toward greater use of air travel?

(total for 40marks)

Answer 1

1). As we know that the production function shows the technical relationship between inputs and the output that can be produced from using factors of production. There are two time periods of production function, short period and long period .

Short run production function means that the factors of production cannot be increased rapidly, some factors of production are kept constant like capital. In short run we can only increase the variable factor that is labour,labour hours ets. There are three stages of short run production function, The three stages of short-run production are readily seen with the three product curves--total product, average product, and marginal product. A set of product curves is presented in the exhibit to the right. Marginal product eventually turns negative, but average product remains positive.

2). Economics is a branch of social sciences, which studies how the man runs his economic activities and tries to satisfy his wants and attains a higher standard of living while living in econnomy.Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. The ultimate goal of economic science is to improve the living conditions of people in their everyday lives. Increasing the gross domestic product is not just a numbers game. The subject matter of Economics revolves around wants, efforts, and satisfaction. The three problems of econmics are as what ,how and whom to produce.

3). An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer. An externality can be both positive or negative and can stem from either the production or consumption of a good or service. The example of positive externality is like planting a tree, street lighting, sanitation etc. The example of negative externality are as pollution caused by firm, deforestation, Air pollution from motor vehicles is an example of a negative externality. The costs of the air pollution for the rest of society is not compensated for by either the producers or users of motorized transport.

Ship travel in India is one of the famous ways of traveling. People from ancient times likes to travel by ship. In previous times the people of India used to go through ships, to travel. The cost of ship travel is low as compared to air and other ways of transport except railways. The ship travel generate a number of positive and negative externality. The positive ones being low cost travel and negative ones being lot of travel time.cruise ship traffic produces continuously increasing air pollution in both ports over recent years. More importantly, however, the analysis of the ship operating characteristics reveals that for any given ship traffic involving specific vessels using marine fuel of a given quality, the presence of other factors (e.g. berth availability, berth accessibility etc) can also influence the ship emission levels. This is particularly evident in the case of the port of Kotor where berth space insufficiency dictates the need for ship anchorage thus leading to increased air pollution and costs of associated damage.

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