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Production Schedule. Production Table Production Table for a Linear Production Function Equation: Patients served = 5*Doctors + 5* Nurses.

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Presentation on theme: "Production Schedule. Production Table Production Table for a Linear Production Function Equation: Patients served = 5*Doctors + 5* Nurses."— Presentation transcript:

1 Production Schedule

2 Production Table

3 Production Table for a Linear Production Function Equation: Patients served = 5*Doctors + 5* Nurses

4 Production Table for a Linear Production Function Equation: Patients served = 5*Doctors + 5* Nurses

5 Production Table for a Min() Production Function Equation: Patients served = 10*Min(Doctors, Nurses)

6 Production Table for a Multiplicative Function Equation: Patients served = 5*Doctors* Nurses

7 Nurses Patients/Nurse with 2 doctors with 1 doctor 10 12 14 16 Marginal Productivity of Nurses

8 Nurses with 2 doctors with 1 doctor 10 12 14 16 MARGINAL PRODUCT CURVES TOTAL PRODUCT CURVES with 2 doctors with 1 doctor Patients/Day Nurses 14 10 22 30 Patients/nurse

9 SATELLITE SHORT RUN COSTS Voice Total ATC AVC MC Chan- Cost ($/Vch)($/VCh)($/VCh) nels ($/mo.) 0 30,000* ---- ---- ---- 200 50,000 250 100 100 400 70,000 175 100 100 600 90,000 150 100 100 800 130,000 162 125 200 1000 250,000 250 220 600 *FIXED COST: Cost at ZERO output

10 SATELLITE SHORT RUN COST MC ATC $/VOICE CHANNEL VOICE CHANNELS AVC Shut down price

11 COMPETING TELECOMMUNICATION TECHNOLOGIES: LONG RUN ATC Voice Satel- Micro- Copper Fiber Exit Long- chan- lite wave Cable Optic run ATC nels ($/VCh)($/VCh)($/VCh)($/VCh)($/Vch)($/VCh 0 --- ---- ------ ----- 0 0 200 250 290 770 410 0 250 400 175 165 395 210 0 165 600 150 123 270 143 0 123 800 162 102 207 110 0 102 1000 250 90 170 90 0 90 1200 ---- 92 145 77 0 77 1400 ---- 150 127 67 0 67

12 TELECOMMUNICATION AVERAGE COST COPPER FIBER OPTIC MICRO- WAVE SATELLITE

13 TELECOMMUNICATION AVERAGE COST Copper Fiber Optic Microwave Satellite LONG RUN AVERAGE COST

14 SOURCES OF ECONOMIES OF SCALE * SPECIALIZATION AND DIVISION OF LABOR * INDIVISIBILITIES * DIMENSIONAL RELATIONSHIPS * MARKET SIZE AND NETWORK EXTERNALITIES * MULTIPLANT ECONOMIES * INCREASING RETURNS EXISTS

15 SOURCES OF DISECONOMIES OF SCALE * PHYSICAL CONSTRAINTS * MANAGERIAL CONTROL LOSS * COSTS OF CENTRALIZATION * INCREASING RETURNS EXISTS NOWHERE

16 CHAPTER 10: COPIER PRODUCTION copiers Short run Average Costs: Long Run month Plant #1 Plant #2 Plant #3 Plant #4 Av. Cost 0 ---- ----- ---- ---- ----- 2500 8800 9500 10000 12000 8800 5000 8000 7400 8000 9500 7400 7500 7500 6900 6700 7800 6700 10000 7400* 6500* 6100 6300 6100 12500 7800 6800 5800* 5600 5600 15000 8200 7300 6000 5300** 5300 17500 8700 7900 6400 6000 6000 20000 9400 8600 7600 7000 7000 22500 10400 9500 9000 8300 8300 25000 11600 10600 10400 10000 10000

17 copiers Short run Average Costs: Long Run month Plant #1 Plant #2 Plant #3 Plant #4 Av. Cost 0 ---- Minimum of Short Run Average Cost 2500 8800 9500 10000 12000 8800 5000 8000 7400 8000 9500 7400 7500 7500 6900 6700 7800 6700 10000 7400* 6500* 6100 6300 6100 12500 7800 6800 5800* 5600 5600 15000 8200 7300 6000 5300** 5300 17500 8700 7900 6400 6000 6000 20000 9400 8600 7600 7000 7000 22500 10400 9500 9000 8300 8300 25000 11600 10600 10400 10000 10000 EFFICIENT UTILIZATION (Short Run)

18 copiers Short run Average Costs: Long Run month Plant #1 Plant #2 Plant #3 Plant #4 Av. Cost 0 ---- Minimum of Long Run Average Cost 2500 8800 9500 10000 12000 8800 5000 8000 7400 8000 9500 7400 7500 7500 6900 6700 7800 6700 10000 7400* 6500* 6100 6300 6100 12500 7800 6800 5800* 5600 5600 15000 8200 7300 6000 5300** 5300 17500 8700 7900 6400 6000 6000 20000 9400 8600 7600 7000 7000 22500 10400 9500 9000 8300 8300 25000 11600 10600 10400 10000 10000 MOST EFFICIENT INVESTMENT(LR)

19 copiers Short run Average Costs: Long Run month Plant #1 Plant #2 Plant #3 Plant #4 Av. Cost 0 ---- Lowest AC at each output level. 2500 8800 9500 10000 12000 8800 5000 8000 7400 8000 9500 7400 7500 7500 6900 6700 7800 6700 10000 7400* 6500* 6100 6300 6100 12500 7800 6800 5800* 5600 5600 15000 8200 7300 6000 5300** 5300 17500 8700 7900 6400 6000 6000 20000 9400 8600 7600 7000 7000 22500 10400 9500 9000 8300 8300 25000 11600 10600 10400 10000 10000 TECHNICALLY EFFICIENT CHOICES

20 copiers Short run Average Costs: Long Run month Plant #1 Plant #2 Plant #3 Plant #4 Av. Cost 0 ---- Minimum of Long Run Average Cost 2500 8800 9500 10000 12000 8800 5000 8000 7400 8000 9500 7400 7500 7500 6900 6700 7800 6700 10000 7400* 6500* 6100 6300 6100 12500 7800 6800 5800* 5600 5600 15000 8200 7300 6000 5300** 5300 17500 8700 7900 6400 6000 6000 20000 9400 8600 7600 7000 7000 22500 10400 9500 9000 8300 8300 25000 11600 10600 10400 10000 10000 MOST EFFICIENT INVESTMENT(LR)

21 Copiers per month Price ($/copier) 4 COPIER PRODUCING PLANTS LRAC #4 #3 #2 #1

22 Copiers per month Price ($/copier) #4 #3 #2 #1 ENVELOPE OF TECHNICALLY EFFICIENT POINTS TECHNICAL EFFICIENCY LOWEST AC AT EACH OUTPUT

23 Copiers per month Price ($/copier) #4 #3 #2 #1 CAPACITY UTILIZATION EFFICIENT SHORT RUN EFFICIENCY MINIMUM OF EACH SHORT RUN AVERAGE COST CURVE

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