rohlf_lecture7 - Chapter 5 Costs and Decision Making...

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Chapter 5 Costs and Decision Making
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2 Introduction to market structure Market Type Number of producers Type of product Power over price Barriers to entry Perfect Competition Many Standard None Low Monopolistic competition Many Differen- tiated Some Low Oligopoly Few Either diff. or st. Some High Monopoly One Unique A lot Very high
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3 Types of Costs: Variable and Fixed Variable and fixed costs Some costs vary with output – e.g. to produce more hire more workers; to produce less fire some workers Some costs cannot be varied in the short-run – e.g. factory space rented with 1-year lease; you must pay rent for a year even if you shut down the business Short-run versus long-run In long-run, no fixed costs; all costs are variable In short-run, both fixed and variable costs Total Cost = Variable + Fixed costs
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Types of Costs: Average costs Average costs are total costs/output There are 3 average cost concepts, one corresponding to each cost type (variable,
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This note was uploaded on 04/08/2008 for the course ECONOMICS 101 taught by Professor Goodspeed during the Winter '08 term at CUNY Hunter.

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rohlf_lecture7 - Chapter 5 Costs and Decision Making...

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