This document discusses the costs of production. It defines key concepts like the production function, marginal physical product, diminishing returns, and different types of costs including fixed costs, variable costs, average costs, marginal costs, and economic vs accounting costs. It explains how average costs have a U-shaped curve and discusses economies and diseconomies of scale related to long-run costs.
This document discusses economic costs faced by businesses from producing goods and services. It outlines two types of costs - explicit costs which are monetary payments, and implicit costs which are opportunity costs of using self-owned resources. Implicit costs along with explicit costs make up total or economic costs. The document also discusses short-run and long-run production time periods and how costs behave in each, including the concepts of fixed, variable, total, average and marginal costs. In the long-run, all costs are variable and economies and diseconomies of scale can impact cost structures.
This document discusses cost concepts from an accounting and analytical perspective. It defines different types of costs such as fixed, variable, total, average, and marginal cost. It explains the relationship between these costs and how they change with varying levels of output in the short-run and long-run. The short-run cost curves are U-shaped while the long-run average cost curve is U-shaped, reflecting economies and diseconomies of scale. Other concepts covered include opportunity cost, sunk cost, learning curves, and economies of scope.
Economic theory of production and production costEllen Pineda
The document discusses economic theory of production and production costs. It defines a firm as an entity that buys inputs, converts them into outputs, and sells the outputs. A firm operates between input and output markets. The production function defines the maximum output achievable from given inputs. Total cost is derived from the production function and includes fixed, variable, marginal, and average costs. Firms aim to minimize costs and equalize marginal productivity across inputs in both the short and long run to produce at the lowest possible cost.
This document discusses production and costs in both the short-run and long-run. In the short-run, at least one factor of production is fixed, while in the long-run all factors are variable. The factors of production are land, labor, capital, and entrepreneurship. Laws of returns to scale describe how output responds to changing variable inputs. Short-run costs include total, fixed, and variable costs. Long-run average costs depend on whether there are increasing, constant, or decreasing returns to scale. Economies of scale from specialization, bulk purchasing, and other factors can lower long-run average costs.
This document summarizes key concepts around costs of production for businesses. It discusses economic costs, accounting profit vs economic profit, explicit vs implicit costs. It also covers short-run and long-run production relationships including total, average and marginal product/cost. Key points around economies of scale, minimum efficient scale, and how these impact industry structure are also summarized.
This document discusses the economic costs of production for businesses. It defines economic costs as the opportunity costs of resources used in production, including both explicit monetary costs and implicit costs. The document distinguishes between accounting profit, which only considers explicit costs, and economic profit, which considers total opportunity costs. It then covers the relationships between total, marginal, and average production in the short-run and how costs like total, average, and marginal costs are derived. Finally, it discusses long-run production costs and how economies of scale can result in lower average costs for businesses.
This document discusses production functions and cost analysis. It begins by defining a production function as a mathematical equation that relates inputs to outputs. It notes that production functions can be used to determine optimal input levels and minimize costs. The document then discusses several concepts related to production functions including total product, average product, and marginal product. It also outlines several managerial uses of production functions such as determining profitable production levels and prices. The document goes on to explain the Cobb-Douglas production function and provides its mathematical form. It also discusses laws of production and empirical estimation of costs. Finally, it covers short-run and long-run cost curves as well as concepts like fixed costs, variable costs, marginal costs, economies of scale,
This document discusses economic costs faced by businesses from producing goods and services. It outlines two types of costs - explicit costs which are monetary payments, and implicit costs which are opportunity costs of using self-owned resources. Implicit costs along with explicit costs make up total or economic costs. The document also discusses short-run and long-run production time periods and how costs behave in each, including the concepts of fixed, variable, total, average and marginal costs. In the long-run, all costs are variable and economies and diseconomies of scale can impact cost structures.
This document discusses cost concepts from an accounting and analytical perspective. It defines different types of costs such as fixed, variable, total, average, and marginal cost. It explains the relationship between these costs and how they change with varying levels of output in the short-run and long-run. The short-run cost curves are U-shaped while the long-run average cost curve is U-shaped, reflecting economies and diseconomies of scale. Other concepts covered include opportunity cost, sunk cost, learning curves, and economies of scope.
Economic theory of production and production costEllen Pineda
The document discusses economic theory of production and production costs. It defines a firm as an entity that buys inputs, converts them into outputs, and sells the outputs. A firm operates between input and output markets. The production function defines the maximum output achievable from given inputs. Total cost is derived from the production function and includes fixed, variable, marginal, and average costs. Firms aim to minimize costs and equalize marginal productivity across inputs in both the short and long run to produce at the lowest possible cost.
This document discusses production and costs in both the short-run and long-run. In the short-run, at least one factor of production is fixed, while in the long-run all factors are variable. The factors of production are land, labor, capital, and entrepreneurship. Laws of returns to scale describe how output responds to changing variable inputs. Short-run costs include total, fixed, and variable costs. Long-run average costs depend on whether there are increasing, constant, or decreasing returns to scale. Economies of scale from specialization, bulk purchasing, and other factors can lower long-run average costs.
This document summarizes key concepts around costs of production for businesses. It discusses economic costs, accounting profit vs economic profit, explicit vs implicit costs. It also covers short-run and long-run production relationships including total, average and marginal product/cost. Key points around economies of scale, minimum efficient scale, and how these impact industry structure are also summarized.
This document discusses the economic costs of production for businesses. It defines economic costs as the opportunity costs of resources used in production, including both explicit monetary costs and implicit costs. The document distinguishes between accounting profit, which only considers explicit costs, and economic profit, which considers total opportunity costs. It then covers the relationships between total, marginal, and average production in the short-run and how costs like total, average, and marginal costs are derived. Finally, it discusses long-run production costs and how economies of scale can result in lower average costs for businesses.
This document discusses production functions and cost analysis. It begins by defining a production function as a mathematical equation that relates inputs to outputs. It notes that production functions can be used to determine optimal input levels and minimize costs. The document then discusses several concepts related to production functions including total product, average product, and marginal product. It also outlines several managerial uses of production functions such as determining profitable production levels and prices. The document goes on to explain the Cobb-Douglas production function and provides its mathematical form. It also discusses laws of production and empirical estimation of costs. Finally, it covers short-run and long-run cost curves as well as concepts like fixed costs, variable costs, marginal costs, economies of scale,
1. When business in the City of London slows down, the demand for MBA courses tends to increase as the opportunity cost of doing an MBA is reduced with falling city bonuses.
2. According to a professor at Oxford, when financial markets decline and city bonuses fall, it becomes less costly to undertake an MBA program.
3. The slowdown in business in the City of London in 2008 led to a rise in recruitment for MBA courses as the costs of doing so compared to potential bonuses were lower.
Cost means the amount of expenditure (actual or notional) incurred on, or attributable to, a given thing.
The Institute of Cost and Management Accountant, England (ICMA) has defined Cost Accounting as – “the process of accounting for the costs from the point at which expenditure incurred, to the establishment of its ultimate relationship with cost centers and cost units.
In its widest sense, it embraces the preparation of statistical data, the application of cost control methods and the ascertainment of the profitability of activities carried out or planned”.
This document discusses the concepts of short run and long run costs, diminishing marginal returns, and the relationship between total, marginal, and average product.
In the short run, average costs rise due to diminishing marginal returns, where adding more of a variable input to a fixed input results in lower marginal productivity. In the long run, all inputs are variable and diminishing returns can be avoided by adjusting all factors of production.
The marginal product of an input initially rises with addition of units, due to specialization effects, but eventually declines as the fixed inputs become overloaded, illustrated with a total, marginal, and average product curve analysis. Diminishing returns refers to an increasing total product at a decreasing rate.
This document provides an overview of key economic concepts related to the price system and theory of the firm. It covers topics such as demand and supply, costs of production, market structures, and profit maximization. Several examples and exercises are provided to illustrate key points. The document is intended as a supplemental guide for students taking an A-Level Economics course. It defines important terminology and uses graphs and data to explain fundamental economic principles in the subject areas.
This document discusses different types of costs that producers consider, including total, average, and marginal costs. It defines fixed costs as those that do not vary with output, and variable costs as those that do vary with output. Total costs are the sum of fixed and variable costs. The document provides examples of accounting costs, which are retrospective, versus economic costs, which consider future and opportunity costs. It also distinguishes between explicit costs, which are actual expenses, and implicit costs, which are the value of owned inputs. Finally, it outlines the components of short-run cost analysis, including formulas for average fixed cost, average variable cost, average total cost, and marginal cost.
This document discusses concepts related to cost analysis and production functions. It defines different types of costs such as fixed costs, variable costs, total costs, average costs and marginal costs. It also discusses the cost-output relationship in the short run and how total cost is composed of total fixed cost and total variable cost. The document then defines different types of revenue such as total revenue, average revenue and marginal revenue. It also explains the production function and how it shows the relationship between inputs and maximum possible output. Finally, it discusses the law of variable proportions, economies of scale, diseconomies of scale and what an isoquant is.
Theory of Production and Costs & Cost ConceptsAakash Singh
This document discusses theories of production and cost concepts. It defines production as the conversion of raw materials into goods and services to satisfy consumer demand. It identifies the four factors of production as land, labor, capital, and entrepreneurship. It then explains various cost concepts like fixed, variable, total, average, and marginal costs. Finally, it describes break-even analysis, including how to calculate the break-even point using graphs and equations. It shows the break-even point as the level of output where total revenue and total costs are equal.
Costs Of Production Micro Economics ECO101Sabih Kamran
This document discusses the costs of production for a firm. It begins by defining a firm and its goal of profit maximization. It explains that a firm faces constraints from technology, information, and markets. It also discusses the five basic decisions a firm must make: what and how much to produce, how to produce, how to organize workers, how to market and price products, and what to produce internally vs externally.
The document then explains the differences between short-run and long-run time frames. In the short-run, capital is fixed while variable inputs can change, while in the long-run all inputs are variable. It introduces the concepts of total, average, and marginal costs. Finally, it discusses how
Factors of production include land, labor, and capital. In the short run, firms can vary labor but capital is fixed. In the long run, all factors are variable. Production functions relate inputs to outputs. The law of diminishing returns applies in the short run. Isoquants and isocosts determine least-cost production combinations. Total costs include fixed and variable costs. Average and marginal costs are calculated. Economies of scale occur when long-run average costs fall as output increases due to experience effects. Diseconomies arise from coordination problems at large scales.
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. Key tools for understanding costs like isoquants, isocost lines, and cost curves are presented.
This document provides an overview of engineering economics and its application in process engineering. It discusses key concepts like the time value of money, methods for quantifying project profitability like net present value, payback period, return on investment, and internal rate of return. It also covers typical accounting tools used like income statements and cash flow statements. The document explains how to estimate capital costs using methods like the turnover ratio and Lang's factor as well as operating costs considering factors like labor, materials, and utilities. It emphasizes the need to balance accuracy and cost when developing cost estimates.
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. It analyzes these concepts using production isoquants, isocost lines, and cost curves.
Be chap4 the production process and costsfadzliskc
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. It provides examples and diagrams to illustrate these important economic concepts.
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Detailed Presentation on cost analysis including:
01 INTRODUCTION TO COST ANALYSIS
02 COST CONCEPT AND ITS TYPES
03 BRIEF OVERVIEW OF THE TYPES
04 PRODUCTION COSTS
05 DETERMINANTS OF COSTS
By: Archit Aditya
Follow
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Pinterest:https://pinterest.com/architaditya
The document discusses different concepts of cost including nominal cost, real cost, money cost, and opportunity cost. It also explains the differences between short-run and long-run costs, and how average, marginal, total, fixed, and variable costs are calculated and relate to each other. Finally, it addresses the shapes of long-run average and marginal cost curves and why they change with scale of production.
Cost analysis refers to studying how costs change with production levels and other economic factors. Costs are classified as explicit or implicit, and by their behavior as fixed, variable, or semi-variable. In the short run, average and marginal costs decrease initially as output rises due to efficiencies, but average costs eventually increase due to diminishing returns. In the long run, all factors are variable and average costs decrease with larger scale until an optimal size is reached.
A firm's total cost includes both explicit costs related to money outlays as well as implicit opportunity costs related to forgone alternative production opportunities. Economists measure economic profit as total revenue minus total costs, including both explicit and implicit costs, while accountants only consider explicit costs in measuring accounting profit. For a firm to remain competitive in an industry, it needs to earn at least a normal profit to cover the opportunity cost of capital and enterprise. While accounting profit only considers explicit costs, economic analysis considers both explicit and implicit opportunity costs in determining economic profit.
This document discusses production decisions made by firms. It covers:
1. A firm's production technology can be represented by a production function that shows how inputs like labor and capital can be transformed into outputs.
2. In the short run, a firm may vary only one input like labor while capital is fixed, facing diminishing marginal returns.
3. In the long run, a firm can vary both inputs and their combinations are shown on isoquants maps, with marginal rate of technical substitution measuring the tradeoff between inputs.
4. Returns to scale describes how output changes when all inputs are increased proportionately, with possibilities being increasing, constant, or decreasing.
CH 4 The Theory of Production and Cost.pptxDawitHaile12
This chapter discusses production theory and cost theory in the short run. It defines key concepts such as production function, fixed and variable inputs, total product, average product and marginal product. It explains the three stages of production in the short run based on the law of diminishing returns. It also defines total, average and marginal costs, and describes how they change with output based on the total, average and marginal cost curves. Finally, it discusses the relationship between short run production functions and cost functions.
The document summarizes the key characteristics and dynamics of competitive markets. In perfect competition, many small firms produce identical goods, it is easy to enter and exit the industry, and firms price their goods where marginal cost equals price. If an industry is profitable, new firms will enter and supply will increase, driving the price down until profits reach zero at the long-run equilibrium. This process forces firms to continually improve efficiency and quality to remain competitive.
The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The determinants of a firm's supply include input prices, technology, expectations, and taxes/subsidies. A change in these determinants shifts the supply curve by affecting marginal costs.
1. When business in the City of London slows down, the demand for MBA courses tends to increase as the opportunity cost of doing an MBA is reduced with falling city bonuses.
2. According to a professor at Oxford, when financial markets decline and city bonuses fall, it becomes less costly to undertake an MBA program.
3. The slowdown in business in the City of London in 2008 led to a rise in recruitment for MBA courses as the costs of doing so compared to potential bonuses were lower.
Cost means the amount of expenditure (actual or notional) incurred on, or attributable to, a given thing.
The Institute of Cost and Management Accountant, England (ICMA) has defined Cost Accounting as – “the process of accounting for the costs from the point at which expenditure incurred, to the establishment of its ultimate relationship with cost centers and cost units.
In its widest sense, it embraces the preparation of statistical data, the application of cost control methods and the ascertainment of the profitability of activities carried out or planned”.
This document discusses the concepts of short run and long run costs, diminishing marginal returns, and the relationship between total, marginal, and average product.
In the short run, average costs rise due to diminishing marginal returns, where adding more of a variable input to a fixed input results in lower marginal productivity. In the long run, all inputs are variable and diminishing returns can be avoided by adjusting all factors of production.
The marginal product of an input initially rises with addition of units, due to specialization effects, but eventually declines as the fixed inputs become overloaded, illustrated with a total, marginal, and average product curve analysis. Diminishing returns refers to an increasing total product at a decreasing rate.
This document provides an overview of key economic concepts related to the price system and theory of the firm. It covers topics such as demand and supply, costs of production, market structures, and profit maximization. Several examples and exercises are provided to illustrate key points. The document is intended as a supplemental guide for students taking an A-Level Economics course. It defines important terminology and uses graphs and data to explain fundamental economic principles in the subject areas.
This document discusses different types of costs that producers consider, including total, average, and marginal costs. It defines fixed costs as those that do not vary with output, and variable costs as those that do vary with output. Total costs are the sum of fixed and variable costs. The document provides examples of accounting costs, which are retrospective, versus economic costs, which consider future and opportunity costs. It also distinguishes between explicit costs, which are actual expenses, and implicit costs, which are the value of owned inputs. Finally, it outlines the components of short-run cost analysis, including formulas for average fixed cost, average variable cost, average total cost, and marginal cost.
This document discusses concepts related to cost analysis and production functions. It defines different types of costs such as fixed costs, variable costs, total costs, average costs and marginal costs. It also discusses the cost-output relationship in the short run and how total cost is composed of total fixed cost and total variable cost. The document then defines different types of revenue such as total revenue, average revenue and marginal revenue. It also explains the production function and how it shows the relationship between inputs and maximum possible output. Finally, it discusses the law of variable proportions, economies of scale, diseconomies of scale and what an isoquant is.
Theory of Production and Costs & Cost ConceptsAakash Singh
This document discusses theories of production and cost concepts. It defines production as the conversion of raw materials into goods and services to satisfy consumer demand. It identifies the four factors of production as land, labor, capital, and entrepreneurship. It then explains various cost concepts like fixed, variable, total, average, and marginal costs. Finally, it describes break-even analysis, including how to calculate the break-even point using graphs and equations. It shows the break-even point as the level of output where total revenue and total costs are equal.
Costs Of Production Micro Economics ECO101Sabih Kamran
This document discusses the costs of production for a firm. It begins by defining a firm and its goal of profit maximization. It explains that a firm faces constraints from technology, information, and markets. It also discusses the five basic decisions a firm must make: what and how much to produce, how to produce, how to organize workers, how to market and price products, and what to produce internally vs externally.
The document then explains the differences between short-run and long-run time frames. In the short-run, capital is fixed while variable inputs can change, while in the long-run all inputs are variable. It introduces the concepts of total, average, and marginal costs. Finally, it discusses how
Factors of production include land, labor, and capital. In the short run, firms can vary labor but capital is fixed. In the long run, all factors are variable. Production functions relate inputs to outputs. The law of diminishing returns applies in the short run. Isoquants and isocosts determine least-cost production combinations. Total costs include fixed and variable costs. Average and marginal costs are calculated. Economies of scale occur when long-run average costs fall as output increases due to experience effects. Diseconomies arise from coordination problems at large scales.
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. Key tools for understanding costs like isoquants, isocost lines, and cost curves are presented.
This document provides an overview of engineering economics and its application in process engineering. It discusses key concepts like the time value of money, methods for quantifying project profitability like net present value, payback period, return on investment, and internal rate of return. It also covers typical accounting tools used like income statements and cash flow statements. The document explains how to estimate capital costs using methods like the turnover ratio and Lang's factor as well as operating costs considering factors like labor, materials, and utilities. It emphasizes the need to balance accuracy and cost when developing cost estimates.
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. It analyzes these concepts using production isoquants, isocost lines, and cost curves.
Be chap4 the production process and costsfadzliskc
This chapter discusses the production process and costs. It introduces key concepts such as the production function, short-run and long-run periods, measures of productivity, and the relationship between inputs and marginal returns. The chapter also covers cost functions, cost minimization, input substitution, economies and diseconomies of scale, and average and marginal costs. It provides examples and diagrams to illustrate these important economic concepts.
Join for crypto trading and investing.
https://wazirx.com/invite/my7upc65
Detailed Presentation on cost analysis including:
01 INTRODUCTION TO COST ANALYSIS
02 COST CONCEPT AND ITS TYPES
03 BRIEF OVERVIEW OF THE TYPES
04 PRODUCTION COSTS
05 DETERMINANTS OF COSTS
By: Archit Aditya
Follow
Instagram:https://www.instagram.com/architavi01
Linkedin:https://www.linkedin.com/in/archit-aditya-557958128
Youtube:https://www.youtube.com/starorganization
Blog:https://astarfuturistic.blogspot.com
Pinterest:https://pinterest.com/architaditya
The document discusses different concepts of cost including nominal cost, real cost, money cost, and opportunity cost. It also explains the differences between short-run and long-run costs, and how average, marginal, total, fixed, and variable costs are calculated and relate to each other. Finally, it addresses the shapes of long-run average and marginal cost curves and why they change with scale of production.
Cost analysis refers to studying how costs change with production levels and other economic factors. Costs are classified as explicit or implicit, and by their behavior as fixed, variable, or semi-variable. In the short run, average and marginal costs decrease initially as output rises due to efficiencies, but average costs eventually increase due to diminishing returns. In the long run, all factors are variable and average costs decrease with larger scale until an optimal size is reached.
A firm's total cost includes both explicit costs related to money outlays as well as implicit opportunity costs related to forgone alternative production opportunities. Economists measure economic profit as total revenue minus total costs, including both explicit and implicit costs, while accountants only consider explicit costs in measuring accounting profit. For a firm to remain competitive in an industry, it needs to earn at least a normal profit to cover the opportunity cost of capital and enterprise. While accounting profit only considers explicit costs, economic analysis considers both explicit and implicit opportunity costs in determining economic profit.
This document discusses production decisions made by firms. It covers:
1. A firm's production technology can be represented by a production function that shows how inputs like labor and capital can be transformed into outputs.
2. In the short run, a firm may vary only one input like labor while capital is fixed, facing diminishing marginal returns.
3. In the long run, a firm can vary both inputs and their combinations are shown on isoquants maps, with marginal rate of technical substitution measuring the tradeoff between inputs.
4. Returns to scale describes how output changes when all inputs are increased proportionately, with possibilities being increasing, constant, or decreasing.
CH 4 The Theory of Production and Cost.pptxDawitHaile12
This chapter discusses production theory and cost theory in the short run. It defines key concepts such as production function, fixed and variable inputs, total product, average product and marginal product. It explains the three stages of production in the short run based on the law of diminishing returns. It also defines total, average and marginal costs, and describes how they change with output based on the total, average and marginal cost curves. Finally, it discusses the relationship between short run production functions and cost functions.
The document summarizes the key characteristics and dynamics of competitive markets. In perfect competition, many small firms produce identical goods, it is easy to enter and exit the industry, and firms price their goods where marginal cost equals price. If an industry is profitable, new firms will enter and supply will increase, driving the price down until profits reach zero at the long-run equilibrium. This process forces firms to continually improve efficiency and quality to remain competitive.
The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The determinants of a firm's supply include input prices, technology, expectations, and taxes/subsidies. A change in these determinants shifts the supply curve by affecting marginal costs.
This document provides an overview of transfer payment programs like welfare and Social Security. It discusses how these programs work, their unintended consequences, and the tradeoffs involved. The major points covered are: transfer payments are provided by the government without an exchange of goods/services; the main recipients are the elderly and poor; these programs can discourage work; and there are dilemmas around balancing welfare eligibility, costs, and work incentives.
This document provides an overview of transfer payment programs like welfare and Social Security. It discusses how these programs work, their unintended consequences, and some of the tradeoffs involved. The major points covered are:
1) Transfer payments are distributed by the government to eligible recipients without requiring an exchange of goods or services. The main recipients are the elderly (via Social Security) and low-income families (via welfare).
2) These programs can discourage work by reducing the incentive to be employed. They may also influence behaviors like family size and retirement decisions.
3) Welfare programs face a dilemma between encouraging work and minimizing costs - strict rules may boost work but limit eligibility, while loose rules do the opposite.
4
This chapter introduces the core concepts and goals of economics. It discusses how scarcity requires economic choices about what to produce, how to produce it, and who receives goods and services. The production possibilities curve (PPC) illustrates the tradeoffs between choices. Markets and governments provide different approaches to these economic questions. The chapter establishes understanding economic decisions and tradeoffs as the foundation for further microeconomic and macroeconomic analysis.
This chapter introduces the concepts of supply and demand. It explains that the price of a good is determined by the interaction of supply and demand in a market. The law of demand states that as price increases, quantity demanded decreases, and vice versa. The law of supply states that as price increases, quantity supplied also increases, and vice versa. Equilibrium occurs when quantity supplied equals quantity demanded at the market price. If supply or demand shifts, a new equilibrium will be established at a different price. The chapter also discusses how price controls can prevent the market from reaching equilibrium.
This document provides an overview of market failures and the role of government in addressing them. It discusses how public goods, externalities, market power, and inequity can lead to market failures. The government aims to intervene to correct market failures and achieve a socially optimal output. However, government intervention also risks government failure if it fails to improve or worsens economic outcomes. A combination of market and government systems may be needed to determine the optimal mix of goods for society.
The document summarizes key concepts about the competitive firm and profit maximization. It discusses how firms in perfect competition are price takers and seek to maximize profits by producing where marginal revenue equals marginal cost. Firms will shut down if price falls below average variable cost. The investment decision depends on whether anticipated profits can cover costs. Determinants of supply include input prices, technology, expectations, and taxes, which can cause the supply curve to shift.
This document provides an overview of monopoly, including:
- A monopoly is a single producer in an industry with no competition. This gives the monopolist power to dictate price.
- A monopolist maximizes profits by producing at the quantity where marginal revenue equals marginal cost and charging the price corresponding to that quantity on the demand curve.
- While monopolies may have some benefits like economies of scale, they also result in lower output, higher prices, and less incentive for innovation compared to competitive markets.
This document provides an overview of oligopoly market structure. Key points include:
- Oligopoly is characterized by a few dominating firms that each have some market power.
- Firms make decisions based on what they think competitors will do, resulting in interdependent behavior.
- Oligopolists avoid price competition and instead pursue nonprice competition like advertising and product differentiation.
- Coordination between oligopolists can involve explicit or tacit price fixing or market share allocation to behave like a monopoly.
- Barriers to entry like patents, brand loyalty, and regulations protect oligopolists from new competition.
This document provides an overview of monopolistic competition, including:
1) Monopolistic competition is a market structure where many firms produce similar but differentiated products, each having some control over price.
2) Firms engage in product differentiation and build brand loyalty to gain market power and act as a local monopoly to loyal customers.
3) While firms maximize profits by producing where MR=MC, in the long run excess capacity and entry by competitors will drive economic profits to zero, resulting in an inefficient market structure compared to perfect competition.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
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A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
2. 7-2
The Costs of Production
• Before anyone can consume to satisfy wants
and needs, goods and services must be
produced.
• Producers are profit-seeking, so they aim to
produce a salable product at the lowest cost
of resources used.
– Many times this means producing overseas.
3. 7-3
The Costs of Production
• However, costs are not the only consideration.
Productivity is also important.
– Paying $10 an hour to typist A who types 90 words
a minute is a lot cheaper than paying $2 an hour to
typist B who types 10 words a minute.
• Exercise: Compare the cost of words per hour
in the example above.
– A: 5,400 words/$10 = 540 words/$1
– B: 600 words/$2 = 300 words/$1
4. 7-4
Learning Objectives
• 07-01. Know what the production function
represents.
• 07-02. Know how the law of diminishing
returns applies to the production process.
• 07-03. Describe how the various measures of
cost are related.
• 07-04. Discuss how economic and accounting
costs are different.
• 07-05. Understand (dis)economies of scale.
5. 7-5
The Production Function
• Production function: a technological
relation-ship expressing the maximum
quantity of a good attainable from different
combinations of factor inputs.
– In other words, how much can we produce with
the land, labor, and capital available?
– We will consider the land to be a fixed amount.
So we can vary only the labor and the capital.
6. 7-6
The Production Function
• In order for labor to produce, it needs land
and capital. With neither, production is zero.
• With fixed land and capital, adding more
labor will increase production.
– First, at a rapid rate as the added workers put
the capital to full use.
– Later, more workers will not add as much new
production as workers overwhelm the available
capital.
7. 7-7
The Production Function
• The productivity
of any factor of
production (e.g.,
labor) depends on
the amount of
other resources
(e.g., capital)
available to it.
8. 7-8
The Production Function
• Note that when capital is fixed, as labor
increases, output increases but ultimately at
a slower rate. Ultimately output maxes out
and begins to decline.
– The measure of this added output as labor
increases is marginal physical product (MPP).
10. 7-10
Diminishing Marginal Returns
• Law of diminishing returns: the marginal
physical product of a variable input declines
as more of it is employed with a given
quantity of other (fixed) inputs.
– Added output begins to decrease and ultimately
goes negative as more and more workers are
added with no increase in capital.
11. 7-11
Resource Costs
• The sales manager wants to maximize sales
revenue.
• The production manager wants to minimize
production costs.
• The business owner wants, instead, to
maximize profit.
• There is no reason to expect these three
goals to occur at the same output.
13. 7-13
Resource Costs
• As MPP decreases with added workers, we
continue to pay the added workers, but we get
less added product with each added worker.
• Therefore, the cost per added product
increases as MPP declines.
• Marginal cost (MC): the increase in total cost
associated with a one-unit increase in
production.
14. 7-14
Marginal Cost (MC)
• When MPP decreases, MC must increase,
and vice versa.
• For any production with fixed capital, the
MC curve will fall at low levels of production
but will rise sharply at higher levels when
diminishing marginal returns set in.
Change in total cost
Marginal cost (MC) =
Change in output
15. 7-15
Dollar Costs
• Total cost (TC): the market value of all
resources used to produce a good or service.
• Fixed cost (FC): costs of production that
don’t change when the rate of output is
altered.
• Variable cost (VC): costs of production that
change when the rate of output is altered.
Total Costs = Fixed costs + Variable costs
TC = FC + VC
16. 7-16
Fixed Costs
• Payments for the fixed inputs.
• Includes the cost of basic plants and
equipment.
• Must be paid even if output is zero.
• Do not increase as output increases.
17. 7-17
Variable Costs
• Payments for the variable inputs.
• Include the costs of labor and raw materials.
• At zero output, these costs are zero.
• As output increases, variable costs increase
rapidly at first, then more slowly, and finally
very fast as the firm approaches maximum
capacity.
18. 7-18
Average Costs
• Average total cost (ATC): total cost divided by the
quantity of output in a given time period.
– ATC = TC / q
• Average fixed costs (AFC): total fixed cost divided by
the quantity of output in a given time period.
– AFC = FC / q
• Average variable cost (AVC): total variable cost
divided by the quantity of output in a given time
period.
– AVC = VC / q
19. 7-19
Characteristics of the Cost Curves
• Falling AFC: as output increases, AFC decreases
rapidly. Any increase in output will lower AFC.
• U-shaped AVC: AVC decreases at first, hits a
minimum, and then rises as output increases
(as a result of diminishing returns).
• U-shaped ATC: at low output, falling AFC
dominates and ATC decreases. As output
increases, rising AVC begins to dominate. ATC
hits a minimum, then begins to rise.
20. 7-20
Minimum Average Cost
• The output at which ATC switches from being
dominated by AFC to being dominated by
rising AVC is the point where average costs are
minimal.
– It is at this output where the firm can produce at
the lowest cost per unit...
– … and where the firm minimizes the amount of
resources being used.
– However, this amount of output is not necessarily
the output where profit is maximized.
21. 7-21
Marginal Cost (MC)
• Diminishing returns in production cause MC to
increase as output increases.
• After a brief drop in MC at low output, MC rises
rapidly as output increases.
• As MC rises, it intersects ATC at its minimum
point.
• ATC decreases when MC<ATC.
• ATC increases when MC>ATC.
Change in total cost
Marginal cost (MC) =
Change in output
22. 7-22
Economic vs. Accounting Costs
• Accountants count only dollar costs of
production – that is, the explicit costs.
– Explicit costs: a payment made for the use of a
resource.
• Economists add the value of all other resources
used in production, including resources not
paid for in dollars.
– Implicit costs: the value of resources used in
production, even when no direct payment is made.
23. 7-23
Economic vs. Accounting Costs
• Explicit costs can be identified by the
accountant with a paper trail denominated in
dollars.
• Implicit costs are the cost of resources for
which no payment is made – that is, the
opportunity cost of using those resources. They
can be identified only by the entrepreneur.
Economic cost = Explicit costs + Implicit costs
24. 7-24
Long-Run Costs
• The short run is characterized by fixed costs.
– In the short run, the plants and equipment are
fixed.
– The objective is to make the best use of those fixed
inputs while making the production decision.
• In the long run, we can change the plants and
equipment.
– Long run: a period of time long enough for all
inputs to be varied.
– There are no fixed costs in the long run. All costs
are variable.
25. 7-25
Long-Run Average Costs
• In the long run, a firm
can build a plant of any
desired size.
• As plant size gets
larger, each plant’s ATC
curve has a lower
minimum point.
• In this case, building a
larger plant would
lower production
costs.
26. 7-26
Long-Run Average Costs
• There are unlimited
options.
• One option delivers
the lowest ATC.
• It is at this point
where the long-run
marginal cost curve
intersects the long-
run average total
cost curve.
27. 7-27
Economies of Scale
• Economies of scale: reductions in minimum
average costs that come through increases
in the size (scale) of plants and equipment.
– Larger plants reduce minimum average costs.
– Greater efficiency may come from
• Specialization vs. multifunction workers.
• Mass production vs. small batch mode production.
28. 7-28
Diseconomies of Scale
• If the plant size gets too big, however, long-
run average costs begin to rise, creating
diseconomies of scale.
– Operating efficiency may be reduced.
– Worker alienation may increase.
– Rigid corporate structures emerge.
– Off-site management may be unresponsive.
• Bigger isn’t always better.
Editor's Notes
It might be useful to really stress that production must precede consumption, that producers are not “our enemies.”
This exercise is simple but gets the productivity point across.
These objectives will be used to summarize the chapter.
Right away, we introduce the decisions a firm has to make: What mix of resources will I use? How much of each?
What happens if I increase one resource but not the other?
In the short run, we will keep capital fixed and vary labor.
It will be a long-run decision to increase or decrease capital.
Point out diminishing marginal returns setting in as more workers are added to the fixed amount of capital.
It might be useful to point out the parallel between MPP and MU.
“Anytime you put a variable amount of something into a fixed-size facility, diminishing returns occur.”
Pizza into a fixed-size stomach; workers into a fixed-size workplace.
At the third worker, MPP stops increasing and will decrease with added workers.
Total output continues to increase, but at a decreasing rate, as shown by diminishing MPP.
This formalizes the definition.
Now might be the time to discuss when MPP goes negative and total output (utility) begins to decrease.
Too many workers get in each other’s way and retard production.
Too many slices of pizza make the consumer feel sick.
The bulk of the remainder of this chapter is concerned about costs of production.
We know that the ATC has a minimum point. That’s where the production manager would like to be.
The other decision makers in the firm have different ideas.
The owner will prevail and will try to maximize profit.
As MPP falls, the added output per added worker decreases. Assume each worker costs the same to hire.
Then as MPP falls, MC (the added cost to produce more output) rises.
The reverse is true at the start-up: MPP rises and MC falls.
Summarizes the previous slide.
This formally defines MC.
FC are the costs of the fixed input (capital). VC are the costs of the variable input (raw materials, labor). They add up to total costs.
Emphasize that FC stay the same no matter what the output level is, including zero output.
If nothing is produced, no raw materials or labor are needed, so VC = 0 when output = 0.
VC rise fast during start-up (when MPP is rising). VC rise more slowly during the middle or production range.
VC again rise fast as maximum capacity to produce is approached (MPP goes negative).
Cost per unit produced is the preferred measure for the production manager. For each level of q, divide q into FC, VC, and TC to get the variables on the slide.
It would not be difficult to create an in-class exercise requiring students to actually do this.
Summarizes the previous slide.
This point is the production manager’s dream: to produce at minimum average cost.
It is also the economist’s dream, since at this point production occurs at the minimum consumption of resources (i.e., efficiently).
Time to drive the MC curve through the ATC curve at its minimum point.
You could use GPA as an example of the MC - ATC relationship.
If you have a B average (equivalent to ATC), and you make a C in the next class (equivalent to MC below ATC), your GPA goes down.
If you have a B average (equivalent to ATC), and you make an A in the next class (equivalent to MC above ATC), your GPA goes up.
We switch now from the concern of the production manager to the concern of the owners.
Economists also look to this concept when considering costs. Economists want to include all resources consumed in production, implicit and explicit.
The owners also want to do this.
In particular, the implicit costs are for resources that the owners usually input into the production.
Since the owners contribute the resources that generate implicit costs and there might be no paper trail accounting for them, only the owners can evaluate them.
They do this by recognizing their opportunity cost.
The owners decide whether to acquire fixed assets in a start-up or an expansion.
Also the owners decide whether to close and dispose of fixed assets.
Thus in the long run, all costs become variable as fixed costs can be increased or decreased.
Here are three plants, of different sizes. As size grows, the AVC drops.
Sculpting the three plants for outputs that don’t overlap gives us a look at long-run ATC.
Now expand the possibilities of plant size, and the long-run ATC curve smoothes out.
Its MC curve intersects the long-run ATC at its minimum point.
Costs fall as size increases due to economies of scale.
In many cases, efficiencies can be obtained in a larger facility than in a smaller one.
Each type of production tends to have its “ideal size” where economies of scale have been achieved.
Each was probably found by trial and error. This is the reason why many retail outlets are the same size, many supermarkets are the same size, etc.
If a plant is built that is larger than the ideal size, costs rise.
There are many examples of diseconomies of scale in government bureaucracies.