Ch 9 - Organizing production

Ch 9 - Organizing production - Ch. 9: Organizing Production...

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Ch. 9: Ch. 9: Organizing Production Organizing Production Olivier Giovannoni ECO304K: Introduction to Microeconomics
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Outline Outline The previous chapters presented many definitions related to competitive markets and consumer choices. This was part I of the class. Now this chapter 9 is the introductory chapter to part II: firms and markets. This chapter 9 is mostly concerned with definitions (the different types of firms, the firm’s objectives, the main factors influencing the realization of this objective) Chapter 10 is concerned with production and costs, where we will mostly talk about cost curves and introduce different types of costs. Chapters 11 and 12 present two extreme market structures: perfect competition and monopoly Chapter 13 presents the “middle grounds” of monopolistic competition and oligopoly {end of part II of the class, midterm 2} Ch. 9 – Organizing production - 2
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Introduction Introduction 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 interest, depreciation, the entrepreneur’s reward as “ normal profit”… they are all opportunity costs. Economic profit = total revenue – total cost (don’t get mixed up: economic profit normal profit ) Ch. 9 – Organizing production - 3
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Introduction (…) Introduction (…) The firm’s performance is given by its own characteristics but also by 3 broad elements of its environment (details in the next 3 sections): 1. Technology (=method and organization of production) will limit or boost your production.
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This note was uploaded on 04/29/2009 for the course ECON 33815 taught by Professor Giovannoni during the Fall '08 term at University of Texas at Austin.

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Ch 9 - Organizing production - Ch. 9: Organizing Production...

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