ECON 101 2Midtermreview

Total fixed cost tfc is the cost of the firms fixed

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Unformatted text preview: tures of the environment: Technology constraints Information constraints Market constraints Test your understanding! Explain the different types of constraints on a firm, i.e why is technology a constraint? How can information be a constraint on a firm? And how can a market constrain a firm? The Firm’s Efficiencies Technological Efficiency Economic Efficiency A firm organizes production by combining and coordinating productive resources using a mixture of two systems: Command systems Incentive systems Command Systems A command system uses a managerial hierarchy. Commands pass downward through the hierarchy and information (feedback) passes upward. These systems are relatively rigid and can have many layers of specialized management. Incentive Systems An incentive system is a method of organizing pr...
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