{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Flexibility in choosing inputs in the right way

Info iconThis preview shows pages 8–11. Sign up to view the full content.

View Full Document Right Arrow Icon
flexibility in choosing inputs in the right way Result: LR cost function is lower envelope of SR cost functions ) , ( such that min : function cost LR the Deriving , L K f q L w K w L K L K = + ) , ( such that min : function cost SR the Deriving L K f q L w K w L K L = +
Background image of page 8

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 10: Costs Slide 17 The long run vs. the short run LR cost function is lower envelope of SR cost functions FIGURE 10-22 The Family of Cost Curves Associated with a U-Shaped LAC Chapter 10: Costs Slide 18 An application: explaining industry structure Question: Why are there just a few steel producers in the world (and their number is decreasing rapidly!) and very many producers of jewelry? • In other words: why is the market for steel more concentrated than the market for jewelry? • Why are there such few producers of operating systems for computers? Answer: Cost curves, particularly the long run average cost curve are a useful tool towards addressing these questions
Background image of page 9
Chapter 10: Costs Slide 19 An application: explaining industry structure Cost curves and industry structure: natural monopolies • Most highly concentrated industry Æ monopolistic industries FIGURE 10-20 LAC Curves Characteristic of Highly Concentrated Industrial Structures DD Chapter 10: Costs Slide 20 An application: explaining industry structure Cost curves and industry structure FIGURE 10-21 LAC Curves Characteristic of less concentrated industries D D D
Background image of page 10

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 10: Costs Slide 21 The big picture As usual, focus on the big picture • What is a cost function really? • Why do I need to solve the cost minimization problem to arrive at cost function? • Practice solving cost minimization problems • What is the intuition behind the result • Why is it important to have a cost function? Æ Chapters 11-13 • LR and SR costs: what is the relationship? As usual: practice,practice, practice! K K L L w MP w MP =
Background image of page 11
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page8 / 11

flexibility in choosing inputs in the right way Result LR...

This preview shows document pages 8 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online