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Amazon experienced shipping delays as sales increased during the coronavirus pandemic. How do these delays impact...

Amazon experienced shipping delays as sales increased during the coronavirus pandemic. How do these delays impact Amazon’s marginal production cost and Amazon’s average cost of production? In the answer explain the difference between marginal cost and average cost?

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Answer - Amazon is suffering from the dimishing returns to factor. This is the reason why there are delays in shipping. The marginal production has declined. In effort of increasing the supply , more factors would be employed , hence marginal prodictivity will decline. As the marginal prodictivity will decline , the average and marginal cost will rise due to dimishing returns . The average cost is the cost of production per unit and marginal cost is the cost of producing additional unit of output. These are the factors responsible for the shipping delays in the pandemic phase  

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