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ECON 101 2Midtermreview

A firms total revenue equals price p multiplied by

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Unformatted text preview: scope Economies of team production Transactions costs are the costs arising from finding someone with whom to do business, reaching agreement on the price and other aspects of the exchange, and ensuring that the terms of the agreement are fulfilled. Economies of scale occur when the cost of producing a unit of a good falls as its output rate increases. Economies of scope arise when a firm can use specialized inputs to produce a range of different goods at a lower cost than otherwise. Firms can engage in team production, in which the individuals specialize in mutually supporting tasks. Chapter 11: Output and Costs The firm makes many decisions to achieve its main objective: profit maximization. Some decisions are critical to the survival of the firm. Som...
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