econ 211 lecture 12

econ 211 lecture 12 - A firm is limited by three...

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A firm is limited by three constraints: 1. Technology – method of producing a good or service. Includes designs of machines, layout of workplace, organization of firm, incentives. Example of shopping mall – technology for producing retail services which differs from downtown stores and online stores. 2. Information constraints – price information, number and plans of other firms, quality and effort of workforce 3. Market constraints – how much a firm can sell and at what price is limited by the nature of consumer demand. Supply of inputs is limited by the nature of supply. Firms attempt to change these to their benefit by advertising and long-term relationships. Short Run vs. Long Run Total Cost, Total Fixed Cost, and Total Variable Cost Marginal Cost Average Cost – Average Fixed Cost, Average Variable Cost, Average Total Cost Short Run – a time frame in which the quantities of some resources are fixed. For most firms, this refers to the firm’s technology, buildings/factories, organization of
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econ 211 lecture 12 - A firm is limited by three...

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