Deck 10 - Econ 301 Microeconomics L lick to edit Master...

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Click to edit Master subtitle style 5/11/11 Lecture 10. Cost Curves Professor Mian Dai Spring, 2011 Econ 301 Microeconomics
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5/11/11 A road map for today’s talk Total cost function Derived from cost minimization inputs Comparative Statics Economy of scale, diseconomy of scale, MES. What is MC and AC? LTC vs. STC FC, VC, AFC, AVC
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5/11/11 Total cost function Long-run total cost curve shows how total cost varies with output, holding input prices fixed, and choosing all input to minimize cost.
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5/11/11 Practice Let production function be What is the cost minimization inputs? Derive the minimized total cost TC as a function of input prices w and r (where w and r are the input price for L and K respectively). LK Q 50 =
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©Jianjun Wu What happens when just one input price Suppose the output is fixed at 1 million TVs per year and the wage is also fixed. What will happen if the interest rate goes up, meaning the capital is more expensive than before?
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5/11/11 Effect of one input price increase on total cost Long-run total cost curve rotate upward.
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©Jianjun Wu What happens when all input prices If the price of capital and
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Deck 10 - Econ 301 Microeconomics L lick to edit Master...

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