Chapter 6 Cost and Choice. Figure 6.1 A Simplified Jam-Making Technology.

Slides:



Advertisements
Similar presentations
Chapter 6 Cost and Choice. Copyright © 2001 Addison Wesley LongmanSlide 6- 2 Figure 6.1 A Simplified Jam-Making Technology.
Advertisements

Costs Perloff Chapter 7.
Chapter Twenty Cost Minimization.
Cost and Production Chapters 6 and 7.
Chapter 7 (7.1 – 7.4) Firm’s costs of production: Accounting costs: actual dollars spent on labor, rental price of bldg, etc. Economic costs: includes.
Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Managerial Economics, 9e Managerial Economics Thomas Maurice.
Costs, Isocost and Isoquant
Chapter 9: Production and Cost in the Long Run McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Production & Cost in the Long Run
Chapter 7 The Cost of Production 1.
Chapter 9 Costs.
Chapter 7Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved 1 ECON Designed by Amy McGuire, B-books, Ltd. McEachern.
ECON6021 Microeconomic Analysis Production I. Definitions.
CHAPTER 5 The Production Process and Costs Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior.
Chapter 8 Production.
Chapter Twenty-One Cost Curves. Fixed, Variable & Total Cost Functions u F is the total cost to a firm of its short- run fixed inputs. F, the firm’s fixed.
Chapter Seven Costs © 2008 Pearson Addison Wesley. All rights reserved.
Topic 6 : Production and Cost
11 OUTPUT AND COSTS. 11 OUTPUT AND COSTS Notes and teaching tips: 5, 8, 26, 29, 33, and 57. To view a full-screen figure during a class, click the.
Multiple Input Cost Relationships. Output is identical along an isoquant Output is identical along an isoquant Isoquant means “equal quantity” Two inputs.
1 ATC AVC MC Relationship Between Average and Marginal Costs Costs per unit Quantity Q1Q1 B Q0Q0 A.
Managerial Economics & Business Strategy
Chapter 8 Cost McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
PPA 723: Managerial Economics
1 Costs APEC 3001 Summer 2007 Readings: Chapter 10 & Appendix in Frank.
Chapter 8. COSTS McGraw-Hill/IrwinCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8.
Chapter 10 McGraw-Hill/IrwinCopyright © 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 8 Cost Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
The Production Process and Costs
Chapter 5 Production analysis and policy. KEY CONCEPTS production function discrete production function continuous production function returns to scale.
Marginal Rate of Technical Substitution: The rate at which one factor can be substituted for another factor while maintaining a constant level of output.
Measuring Cost: Which Costs Matter?
David Bryce © Adapted from Baye © 2002 Production and Supply MANEC 387 Economics of Strategy MANEC 387 Economics of Strategy David J. Bryce.
8 - 1 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run Costs Graphically Productivity and.
© 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien—1 st ed. c h a p t e r ten Prepared by: Fernando & Yvonn Quijano.
Lecture Notes. Cost Minimization Before looked at maximizing Profits (π) = TR – TC or π =pf(L,K) – wL – rK But now also look at cost minimization That.
The Production Process and Costs
Chapter 8 Cost McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
PPA 723: Managerial Economics Study Guide: Production, Cost, and Supply.
Chapter 7 Costs. © 2004 Pearson Addison-Wesley. All rights reserved7-2 Table 7.1 Variation of Short-Run Cost with Output.
Chapter Seven Costs. © 2007 Pearson Addison-Wesley. All rights reserved.7–2 Table 7.1 Variation of Short-Run Cost with Output.
Chapter 2 Costs. Outline.  Costs in the short run  Costs in the long run.
KULIAH 6 Cost Functions Dr. Amalia A. Widyasanti Program Pasca Sarjana Ilmu Akuntansi FE-UI, 2010.
CDAE Class 20 Nov. 1 Last class: Problem set 5 6. Costs Quiz 5 Today: Result of Quiz 5 6. Costs Next class: 7. Profit maximization and supply Quiz.
Chapter Seven Costs. © 2007 Pearson Addison-Wesley. All rights reserved.7–2 Table 7.1 Variation of Short-Run Cost with Output.
© 2008 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick O’Brien, 2e. Fernando & Yvonn Quijano Prepared by: Chapter 10 Technology,
Steven Landsburg, University of Rochester Chapter 6 Production and Costs Copyright ©2005 by Thomson South-Western, part of the Thomson Corporation. All.
Chapter 8. The Meaning of Costs Opportunity costsOpportunity costs Measuring a firm’s opportunity costsMeasuring a firm’s opportunity costs –factors not.
Costs. Short-run costs Total cost Output (Q) TFC (R) 12 Total costs for firm X.
Chapter 7 The Cost of Production. ©2005 Pearson Education, Inc. Chapter 72 Topics to be Discussed Measuring Cost: Which Costs Matter? Cost in the Short.
Chapter 20 Cost Minimization. Basic model: min x1, x2 w 1 x 1 + w 2 x 2 subject to f (x 1, x 2 ) = y gives c ( w 1, w 2, y )
Chapter 7 The Cost of Production. Chapter 7Slide 2 Topics to be Discussed Measuring Cost: Which Costs Matter? Cost in the Short Run Cost in the Long Run.
Chapter 7 The Cost of Production. Chapter 7Slide 2 Topics to be Discussed Measuring Cost: Which Costs Matter? Cost in the Short Run Cost in the Long Run.
Chapter 7 Production and Cost in the Firm © 2009 South-Western/Cengage Learning.
Copyright © 2005 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Managerial Economics Thomas Maurice eighth edition Chapter 9.
Managerial Economics Short-Run Production
Background to Supply. Background to Supply The Short-run Theory of Production.
Chapter Seven Costs. © 2009 Pearson Addison-Wesley. All rights reserved. 7-2 Topics  Measuring Costs.  Short-Run Costs.  Long-Run Costs.  Lower Costs.
Chapter 20 Cost Minimization. 2 Cost Minimization A firm is a cost-minimizer if it produces any given output level y  0 at smallest possible total cost.
Chapter 8 Cost. Types of Cost Firm’s total cost is the expenditure required to produce a given level of output in the most economical way Variable costs.
Chapter 8 Cost McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
1 Chapters 8: Costs of Production. 2 Cost Definitions Total cost (TC) = all costs of production –If r is the cost of capital (rental cost), and w is the.
1 Part 3 ___________________________________________________________________________ ___________________________________________________________________________.
Production and Cost in the Long Run Nihal Hennayake.
Costs 10-1.
Chapter 6 The Cost of Production Chapter 6 1.
The Production Function II
Presentation transcript:

Chapter 6 Cost and Choice

Figure 6.1 A Simplified Jam-Making Technology

Figure 6.2 The Cost Function for Our Simplified Jam-Making Technology

Figure 6.3 The Jam-Making Technology

Figure 6.4 Isocost Curves and the Optimal Combination of Inputs

Figure 6.5 Isocosts and Isoquants

Solved Problem 6.2 1) What is the MP l and the MP k at the labor-capital combination (2,2)? 2) What is the least-cost way of producing 235 units of output when the price of capital is $1 and the price of labor is $2?

Figure 6.6 A Long-Run Cost Function

Figure 6.7 The Optimal Combination of Inputs in the Short Run

Figure 6.8 The Leontief Production Function

Figure 6.9 Optimal Input Combinations in the Leontief Technology

Figure 6.10 A Cost Function Associated with the Leontief Technology

Figure 6.11 Isoquants Associated with the Cobb- Douglas Technology

Figure 6.12 Cobb-Douglas Production Function

Figure 6.14(a) Long- and Short-Run Production Functions

Figure 6.14(b) Long- and Short-Run Production Functions

Figure 6.15(a) Short-Run Cost Function

Figure 6.16 Some Short-Run Average Cost Curves Output

Solved Problem 6.6 Suppose it costs eBay $10M to get established. Also suppose it currently has 100,000 auctions occurring. Assume the marginal cost of adding another auction is $40. 1) What is the AC of the 100,000 th auction? $140 AFC + AVC $10M/100,000 + (100,000 x $40)/100,000 2) What is the AC of the 100 th auction? $100,040 AFC + AVC $10M/100 + (100,000 x $40)/100 3) What is the MC of the 100 th auction? $40

Figure 6.17 Short-Run Total Cost Functions and a Long-Run Total Cost Function

Figure 6.20 The Relationship between Long-Run and Short-Run Marginal Cost Functions Short run expansion path E

Figure 6.21 Long-Run and Short-Run Marginal Costs

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.