group one - Continuation of Group1! CostCurve

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 Continuation   of  Group 1!
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Cost Curve a graph of the costs of production as a function of total quantity  produced. In a free market economy, productively efficient firms  use these curves to find the optimal point of production  (minimising cost), and profit maximizing firms can use them to  decide output quantities to achieve those aims. There are various  types of cost curves, all related to each other, including total and  average cost curves, and marginal ("for each additional unit")  cost curves, which are the equal to the differential of the total  cost curves. Some are applicable to the short run, others to the  long run.
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Payments to individuals for which no current goods or services  are exchanged, e.g., Social Security, welfare,. .. Income Transfer
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Cost Complications “Reasons why cost may differ” economies of scale a factor called X inefficiency  the need for monopoly-preserving expenditures, and  the very long run perspective which allows for technological  advance
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Network Effects also called network externality or demand-side economies of scale the effect that one user of a good or service has on the value of that product to other  people. When network effect is present, the value of a product or service is dependent on  the number of others using it. classic example is the telephone. The more people own telephones, the more valuable the  telephone is to each owner. This creates a positive externality because a user may purchase a  telephone without intending to create value for other users, but does so in any case. Online  social networks work in the same way, with sites like Twitter and Facebook being more useful the  more users join. The expression "network effect" is applied most commonly to positive network externalities as in  the case of the telephone. Negative network externalities can also occur, where more users  make a product less valuable, but are more commonly referred to as "congestion" (as in traffic  congestion or network congestion).
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This document was uploaded on 11/02/2011 for the course MICRO Microecono at FSU.

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group one - Continuation of Group1! CostCurve

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