Basic_Theory-4 - Basic Theory Theory of Firm and Costs...

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(1'Basic 9Theory 9Theory of 5+Firm and )2(Costs
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8.Industrial 4Organization 2Models ● 8Structure ° )2(Conduct ° 5Performance ● 5Price 9Theory ○ 9Transaction )2(Cost$ ) expenses of trading above and beyond the price± ○ 6,Game 9Theory$ ) uses formal models to analyze conflict and cooperation among firms± ○ )2(Constestable 2Markets$ ) markets in which firms can enter and exit rapidly±
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:9MVJS]`y ]KT 5,NW`[ ● '0&A KTNW`[ is an organization that transforms input in output± ● '0&A firm can transform two inputs² capital ³0K´ and labor ³1L´ into output± ● 8.If we denote output Y so that Y '#," 5+F³0K²1L´² for some production function 5+F³±²±´± ● 5+Firmµs objective is t o maximize profits ± 5Profit '#," 7Revenue ° )2(Cost ● 4*Efficient level of production$ ) maximum level of output for any given level of input±
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:9MVJS]`y ]KT 5,NW`[ ± 54Z\JS`aMVNW^ FO\IR 2)]\W`]Z° 4Ownership and )2(Control ● 5+Forms of 4Ownership and )2(Control in the :U8S ○ 8Sole 5Proprietorship and 5Partnership$ )
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