lecture 21 - LECTURE 21: FIRMS: COSTS OF PRODUCTION Firms:...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
2010: LECTURE 21 1 LECTURE 21: FIRMS: COSTS OF PRODUCTION Firms: - What is a firm ? - What is the firm’s objective ? HOW FIRMS MAKE THINGS: - Fixed inputs - Variable inputs - Law of Diminishing Marginal Product Mankiw: Chapter 13
Background image of page 1

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

View Full DocumentRight Arrow Icon
2010: LECTURE 21 2 FIRMS - PRODUCTION AND COSTS Focus on firms: - production relationship - cost structure with intention of answering: - how much do firms make? - should firm expand, maintain size or shut down?
Background image of page 2
2010: LECTURE 21 3 WHAT IS A FIRM? A shell (black-box, legal entity) which - uses inputs to produce output - is owned by shareholders
Background image of page 3

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

View Full DocumentRight Arrow Icon
2010: LECTURE 21 4 WHAT DO FIRMS DO? % US output Traditional manufacturing 29 Agriculture, fishing, forestry 2 Transportation, communications, utilities 8 Wholesale and retail 16 Finance, insurance, real estate 17 Services, inc. health and education 18 Govt. enterprises 10 Key point: only 29% in “traditional manufacturing.” When we talk about firms using inputs to produce output, - factories - shops - use building, stocks, labor to produce “sales”. - banks - use building, computers, labor to produce “financial transactions”.
Background image of page 4
2010: LECTURE 21 5 WHAT FIRMS ARE TRYING TO DO Firms are owned by shareholders. Shareholders get well-being from profits.
Background image of page 5

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

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

lecture 21 - LECTURE 21: FIRMS: COSTS OF PRODUCTION Firms:...

This preview shows document pages 1 - 6. Sign up to view the full document.

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