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Unformatted text preview: ECN607 Managerial Economics Study Aid: lecture 4.1 Introduction Understanding how much it costs a firm to produce something is common to all businesses. Marginal productivity, which provides insight into how a firm's output responds to changes in inputs, is addressed in this module. The relationship between various types of dollar costs is also considered in this module. The differences between accounting cost and economic cost is also discussed in this module along with concepts related to constant returns to scale, economies of scale, and diseconomies of scale. Types of Dollar Costs Production theory and costs theory are the basis for the study of market structure. Production theory is concerned with finding the optimum quantity of inputs. Production data combined with input prices gives the cost structure of the firm. The theory of production begins with the production function. The production function expresses the relationship between inputs and outputs, showing the maximum amount of output...
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- Spring '10