{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

B200.F09.W08.Costs.Competition.Clsnts

# B200.F09.W08.Costs.Competition.Clsnts - BUAD 200 Fall 2009...

This preview shows pages 1–2. Sign up to view the full content.

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: BUAD 200 Fall 2009: Classnotes: Week 08: October12-14, 2009 The Organization of the Firm 1. Teamwork & Specialization 2. Teamwork Shirking 3. Shirking Monitoring 4. Profits monitor the Owner Firms attempt to Maximize Profits: π = TR -TC; TR = PxQ which is a function of demand facing the firm. TC is a positive function of output. TC increases as output increases. So the question is, … What rate of output maximizes profit ? NEW: First we study Costs. Chapter12 Different decisions faced by owners involve different assumptions. Before going into a business, we consider Long-Run Analysis where all the inputs are variable . Since you can vary all inputs, all costs are variable i.e. no fixed costs. Once you have started in business you are making Short-Run decisions where some inputs are fixed and some are variable therefore some costs are fixed and some are variable. Operating a Widget Factory: In the short-run some costs are fixed: Total Fixed Costs = \$ 100 / day. Building Lease: \$30/day Equipment Lease: \$20/day Opportunity Cost of Owner/manager: \$50/day Analyze output decisions : Different rates of output require different amounts of variable inputs, here the number of workers. Workers 1 2 3 4 5 6 7 8 9 10 Output Q 10 25 45 62 76 86 91 95 97 98 Marginal Product 10 15 20 17 14 10 5 4 2 1 Total Cost 10 120 140 160 180 200 220 240 260 280 300 ∆ TC 20 20 20 20 20 20 20 20 20 20 Marginal Cost-- \$2.00 \$1.3 3 \$1.0 \$1.1 8 \$1.4 3 \$2.0 \$4.0 \$5.0 \$10.0 \$20.00 Average Cost...
View Full Document

{[ snackBarMessage ]}

### Page1 / 6

B200.F09.W08.Costs.Competition.Clsnts - BUAD 200 Fall 2009...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online