Theme4_production_A08AN

Theme4_production_A08AN - Production 2 Introduction Nature...

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Production
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2 Introduction Nature and goals of the firm Production analysis: Short run Long run Returns to scale
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3 The firm A firm : An organization which transforms inputs into output . Goal of a firm: To maximize its profit Profit (π) = Revenue – Costs
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The production process Factors of production (or inputs ): Capital (K) : Durable material ressources Examples: _________________________ Labor (L) : Employee ressources Examples: _________________________ Materials (M) : Ressources which will be transformed in the production process Examples: _________________________ Product (or output ) : _____________________________ Examples : ______________________
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Short run v. Long run Example: A new restaurant realizes that its popularity exceeds its expectations. What are its options? …in the short-run (in the following weeks/months)? …in the long run (in the following years)?
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Theme4_production_A08AN - Production 2 Introduction Nature...

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