Ch 9 - Organizing production

Ch 9 - Organizing production - Ch 9 Ch 9 Or ganizing Or...

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Unformatted text preview: Ch. 9: Ch. 9: Or ganizing Or ganizing Pr oduction Pr oduction Olivier Giovannoni ECO304K: I ntroduction to Microeconomics 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 I I : 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. Chapter s 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 I I of the class, midterm 2} Ch. 9 – Organizing production - 2 I ntr oduction I ntr oduction A fir m 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 fir m’s objective is to maximize pr ofits. The reward of a business is called profit . ◦ Total r evenue 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 pr ofit = total r evenue – total cost (don’t get mixed up: economic profit ≠ normal profit ) Ch. 9 – Organizing production - 3 I ntr oduction (…) I ntr oduction (…) 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. production) will limit or boost your production....
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This note was uploaded on 09/10/2009 for the course ECON 33815 taught by Professor Giovannoni during the Spring '08 term at University of Texas.

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Ch 9 - Organizing production - Ch 9 Ch 9 Or ganizing Or...

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