Lecture Slides 21 - Overview Lecture 21 Last class Theory...

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Overview ( Lecture # 21) Last class: Theory of Firms Today: Theory of Firms cont… 11/30/16 1 Econ 130_ Fall 2016 _ C Dhakal
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Important decisions by firms? What product(s) should the firm produce? How and how much should the product be produced? What production process should be used? What price should the firms charge for its product? How much labor should the firm employ? Answers depend on : The production & cost condition of each firms. Structure of the market for the products. 11/30/16 Econ 130_ Fall 2016 _ C Dhakal 2
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 3
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 4
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 5
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11/30/16 Econ 130_ Fall 2016 _ C Dhakal 6 Typical Cost curves
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Minimum cost output Minimum cost output is the quantity of output at which average total cost is lowest- the bottom of the U-shaped average total cost curve. Point where MC crosses the ATC from below!! 11/30/16 Econ 130_ Fall 2016 _ C Dhakal 7
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Features of Cost curves Three features of cost curves that are typical of many firms
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  • Fall '08
  • Kikuchi,G
  • Economics, #, Economics of production, Cost curve, 336 K

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