cost of prod short and lon run

cost of prod short and lon run - SupplySideoftheMarket...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
    Supply Side of the Market Part 1: Costs of production  
Background image of page 1

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

View Full DocumentRight Arrow Icon
    Objectives Be able to  Define and identify fixed and variable costs;  Define/compute total, marginal and average costs  (TC,  MC,ATC);  explain  relationships between output, MC and  AC  Describe how the pattern of fixed cost ad marginal  productivity translates into typical patterns of average  and marginal cost Describe the choices firms make in the long run; be  able to use an LRAC curve to discuss these choices;  explain economies/diseconomies of scale
Background image of page 2
Outline of the presentation   Theory of the Firm: intro Costs of Production  Short run costs and decisions Fixed and variable cost How productivity changes with output How cost changes with output  Long run costs and decisions (later)  Scale of production Ch 7  Supply Decisions of Competitive  Firm
Background image of page 3

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

View Full DocumentRight Arrow Icon
Supply of Goods The role of businesses (Firms) in the economy:  Organize the factors of production to  produce goods and services. Firms respond to profit incentives  Incentive to produce efficiently Incentive to produce the most beneficial amounts  of each product However: profit is a goal of firms, not the  economy.  The “goal” is for firms to produce the optimal  (most beneficial) amount of each good to  produce efficiently.  
Background image of page 4
Supply of Goods The role of businesses (Firms) in the economy:  Organize the factors of production to produce goods  and services. Firms respond to profit incentives – but profit is not a  goal in the economy.   The “goal” is for firms to produce the optimal (most  beneficial) amount of each good to produce  efficiently.  Production function Firms have to make decisions about production  Available technology determines how much can be  produced with various combinations of resources
Background image of page 5

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

View Full DocumentRight Arrow Icon
The role of businesses Society want firms to act so as to  use our scarce resources  efficiently. Produce the amount that we want of  each good Produce a good as long as the utility it  provides is worth its opportunity cost  Produce efficiently. 
Background image of page 6
Focus on Firm Decisions Therefore, economists look at firms  decisions to see: Will they use efficient methods?  (productive efficiency) Will they act so that quantities and  prices on the market will be optimal?  (allocative efficiency)
Background image of page 7

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

View Full DocumentRight Arrow Icon
Decisions made by a Firm WHAT to produce : Which good Which stages of the production process to  perform  Design, manufacturing, assembly, retailing….
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 65

cost of prod short and lon run - SupplySideoftheMarket...

This preview shows document pages 1 - 9. Sign up to view the full document.

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