CHAP 9 - Organizing production

CHAP 9 - Organizing production - CHAP 9: Organizing...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAP 9: CHAP 9: Organizing Production Organizing Production Olivier Giovannoni 304K: Introduction to Microeconomics Oct 5, 2007
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The firm’s objectives The firm’s objectives A firm is an organization that employs factors of production and organizes them to produce and sell goods and services. Different views of the objectives of the firm (product quality, growth, market share, employee satisfaction…). Bottom line: a firm’s objective is to maximize profits. The reward of a business is called profit. Total revenue is the revenue of sales, investments, holdings, proprietorship, patents, franchises, etc… Total cost consists of all costs of production resources: payments to / for employees, raw materials, loan principal and interests, depreciation, the entrepreneur’s reward as normal profit”… they are all opportunity costs. Economic profit = total revenue – total cost. CHAP 9 – Organizing production 2
Background image of page 2
The firm’s objectives (cont.) The firm’s objectives (cont.) The firm’s performance is given by its characteristics but also by 3 broad elements of its environment (details to follow): 1- Technology (=method and organization of production) will limit or boost your production. 2- Information and organization : decisions about who to hire or when to buy raw materials or which supplier to choose are uncertain. 3- Markets and competition : you are always confronted to buyers’ willingness to pay (D curve), regulations of the market, and other suppliers on that market (S curve, competitors). CHAP 9 – Organizing production 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
1- Technology and efficiency 1- Technology and efficiency There are two kind of production efficiencies. It depends what you minimize for a given level of output : Minimizing inputs used: this is technological efficiency . A method of production more labor-saving is more
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/27/2008 for the course ECON 304K taught by Professor Ledyard during the Fall '08 term at University of Texas at Austin.

Page1 / 11

CHAP 9 - Organizing production - CHAP 9: Organizing...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online