Managerial Econmics Brickley, Smith, Zimmerman Chapter 5 Answers

Managerial Economics and Organizational Architecture

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Chapter 05 - Production And Cost CHAPTER 5 PRODUCTION AND COST CHAPTER SUMMARY This chapter presents a basic economic analysis of production and cost. Primary topics include production functions, optimal input choice, cost, and profit maximization. The chapter also provides an introduction to cost estimation and factor demand curves. The chapter includes a short case study (Rich Manufacturing). An appendix derives the factor-balance equation. CHAPTER OUTLINE P RODUCTION F UNCTIONS Returns to Scale Managerial Application: Increasing Returns to Scale at Volkswagen Returns to a Factor Managerial Application: Studying for an Exam—the Law of Diminishing Returns Managerial Application: Basebals Batting Averages C HOICE OF I NPUTS Production Isoquants Managerial Application: Substitution of Inputs in Home Building Isocost Line Managerial Application: General Motors is Shanghaied Cost Minimization Changes in Input Prices Academic Application: Minimum Wage Laws C OSTS Cost Curves Managerial Application: Job Seekers Use Internet Production Functions and Cost Curves Managerial Application: Industry Responds to Higher Metals Prices Opportunity Costs Short Run Versus Long Run Fixed and Variable Costs Short-Run Cost Curves Long-Run Cost Curves Managerial Application: DeLorean Automobiles Managerial Application: Public Utilities 5-1
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Chapter 05 - Production And Cost Minimum Efficient Scale Managerial Application: Size Doesn’t Always Matter Learning Curves Academic Application: Economies of Scale and Learning Effects in the Chemical Processing Industry Economies of Scope Managerial Application: Economies of Scale and Scope in Apartment Management Managerial Application: Economies of Scale and Scope in DSP Production P ROFIT MAXIMIZATION F ACTOR D EMAND C URVES Managerial Application: China Becomes the “World’s Smokestack” Managerial Application: Hog Producers React to Increase in Corn Prices Managerial Application: Demand for Labor Falls Following 9/11 Terrorist Attacks C OST E STIMATION S UMMARY A PPENDIX : T HE F ACTOR -B ALANCE E QUATION Slope of an Isoquant Factor-Balance Equation TEACHING THE CHAPTER Chapter 5 reviews the basics of production and costs. Although most students will likely have been exposed to the concepts of short-run and long-run costs of production in previous courses, the graphical and quantitative analysis using isoquants and isocost lines may be new for some students. Students typically grasp these concepts more quickly than the consumer choice tools presented in chapter 2, however, instructors will want to review the key concepts and several quantitative examples to be sure students understand the material. In particular, returns to scale are given extensive coverage in the chapter and students are less likely to be familiar with these concepts. Instructors will need to spend varying amounts of time on this chapter based on the backgrounds of the students in the course and the goals of the course. There are numerous
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Managerial Econmics Brickley, Smith, Zimmerman Chapter 5 Answers

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