Chapter 13 Production and Cost Analysis II

Chapter 13 Production and Cost Analysis II - C hapter 13 P...

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

View Full Document Right Arrow Icon
Chapter 13 Production and Cost Analysis I I Technical efficiency in production means that as few inputs as possible are used to produce a given output. Economically efficient means the method that produces a given level of output at the lowest possible cost. In long run production decisions firms choose the most economically efficient way to produce goods Law of diminishing marginal productivity doesn’t apply to the long run since, in the long run, all inputs are variable Economies of scale when long run average total costs decrease as output increase Indivisible set up cost are the cost of an indivisible input for which a certain minimum amount of production must be undertaken before input becomes economically feasible to use o Tshirt production example Minimum efficient level of production is the amount of production that spreads setup costs out sufficiently for a firm to undertake production profitably. The minimum efficient level of production is where the average total costs are
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/23/2011 for the course ECON 2010 taught by Professor Moonjung during the Spring '09 term at UVA.

Page1 / 3

Chapter 13 Production and Cost Analysis II - C hapter 13 P...

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

View Full Document Right Arrow Icon
Ask a homework question - tutors are online