Production and Cost 11

Production and Cost 11 - Production & Cost ManEc

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Click to edit Master subtitle style 11 Man Ec  387 Fall 2011 Mark H. Hansen, PhD Strategy Group Strategy
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22 The Structure of Industries Competitive Rivalry Threat of new Entrants Bargaining Power of Customers Threat of Substitutes Bargaining Power of Suppliers From M. Porter, 1979, “How Competitive Forces Shape Strategy”
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33 Production and Supply Firms acquire inputs from suppliers Economics of production determines demand  for inputs  Inputs are transformed into outputs through a  productivity relationship defined by the  “production function” For example, consider the Cobb-Douglas  production function:
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44 Total Product The Cobb-Douglas Production Function Q = f(K,L) = K0.5L0.5 Assume that in the very short run, capital (K)  is fixed at 16 units Short run production function: Q = 16 0.5  L 0.5  = 4 L 0.5 What is total product (output) when we  use 100 employees?
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55 Product of Labor Marginal Product of Labor  – MPL =  Q/ L measures the output produced by the last  worker slope of the production function Average Product of Labor  – APL = Q/L measures the output of an “average” worker
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This note was uploaded on 10/04/2011 for the course BUS M 382 taught by Professor Cherylmcbetg during the Fall '11 term at BYU.

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Production and Cost 11 - Production & Cost ManEc

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