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Econ100B Lecture6 - 4-17

Econ100B Lecture6 - 4-17 - Economics 100B Lecture 6 S...

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Economics 100B: Lecture 6 S. Nageeb Ali April 17, 2008
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Economics 100B: April 17, 2008 Where we were square6 Shape of long-run average cost curves boxshadowdwn If production function is CRS, AC(q) = constant square6 No economies of scale boxshadowdwn Sometimes U-shaped square6 Initially economies of scale : AC(q) falls as q increases boxshadowdwn Increased specialization, greater efficiency square6 Eventually diseconomies of scale : AC(q) increases as q increases boxshadowdwn Coordination problems, management inefficiencies
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Economics 100B: April 17, 2008 LR Cost Curve for CRS
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Economics 100B: April 17, 2008 Shape of LR Curve
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Economics 100B: April 17, 2008 Learning by Doing square6 Practice makes perfect
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Economics 100B: April 17, 2008 Gym Memberships square6 Temptation for relaxation; not strenuous physical activity boxshadowdwn Self-control problem boxshadowdwn Pre-commitment: join the military, sign up for boot camp boxshadowdwn Join health club square6 In 2001, 17,000 health clubs with 32 million members and annual revenue of $11.6 billion boxshadowdwn Offer monthly and annual membership contracts boxshadowdwn Initiation fees boxshadowdwn Also pay-per-visit fee
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Economics 100B: April 17, 2008 Gyms (2) square6 Some choose monthly…but why?
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