Managerial Economics Short-Run Production

Slides:

Advertisements

Similar presentations

Chapter 6: Production and Costs

Advertisements

Chapter 7Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved 1 ECON Designed by Amy McGuire, B-books, Ltd. McEachern.

1 Relationship of Marginal Product & Average Product Consider the Height of Students in a class Total Height = S 1 + S 2 + S 3 + S 4 + S 5 + S 6 + S 7.

Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Managerial Economics, 9e Managerial Economics Thomas Maurice.

Chapter 8 – Costs and production. Production The total amount of output produced by a firm is a function of the levels of input usage by the firm The.

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.

Production and Costs.

Copyright © 2005 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Managerial Economics Thomas Maurice eighth edition Chapter 8.

1 ATC AVC MC Relationship Between Average and Marginal Costs Costs per unit Quantity Q1Q1 B Q0Q0 A.

10 OUTPUT AND COSTS CHAPTER.

1 Chapter 8 Costs of Production Costs of Production Principles of Economics by Fred M Gottheil PowerPoint Slides prepared by Ken Long © ©1999 South-Western.

9 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run.

Economics 101 – Section 5 Lecture #13 – February 26, 2004 Introduction to Production.

Module 14 Cost in the Short Run.

Economics 2010 Lecture 11 Organizing Production (I) Production and Costs (The short run)

CHAPTER 11 Output and Costs

Today Production and cost in the Short Run

Businesses and the Costs of Production 10 McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

The Costs of Production Chp: 8 Lecture: 15 & 16. Economic Costs  Equal to opportunity costs  Explicit + implicit costs  Explicit costs  Monetary payments.

1 of 16 Principles of Microeconomics: Econ102. does not refer to a specific period of time, but rather are general or broad periods of time that coexist!!

Copyright McGraw-Hill/Irwin, 2005 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run.

8 - 1 Economic Costs Short-Run and Long-Run Short-Run Production Relationships Short-Run Production Costs Short-Run Costs Graphically Productivity and.

Chapter 23: The Firm - Cost and Output Determination

Unit 6 Costs and Decision Making. Role of the Firm Goal  Firms make decisions to maximize profits Production  Transformation of factors into goods Production.

1 Economic Costs. By the end of this section, you should be able to….. Define and calculate total cost, average cost, and marginal cost. Define and calculate.

COSTS OF THE CONSTRUCTION FIRM

Michael Parkin ECONOMICS 5e Output and Costs 1.

ECON107 Principles of Microeconomics Week 12 NOVEMBER w/11/2013 Dr. Mazharul Islam Chapter-11.

Aim: What are short-run production costs? Do Now: What are explicit costs? Implicit costs?

Economies of Scale Chapter 13 completion. The Shape of Cost Curves Quantity of Output Costs $ MC ATC AVC AFC.

Chapter 7 Production and Cost in the Firm © 2009 South-Western/Cengage Learning.

© 2007 Prentice Hall Business Publishing Essentials of Economics R. Glenn Hubbard, Anthony Patrick O’Brien c h a p t e r seven Prepared by: Fernando &

Micro E conomics Unit 7 Slide 1 Created: Jan 2007 by Jim Luke. Division of labour is the great cause of its increased power, as may be better understood.

EFarmer.us Production Function - Hay Copyright 2009 eStudy.us Production Function shows the relationship between the level of.

© 2003 McGraw-Hill Ryerson Limited. Production and Cost Analysis I Chapter 9.

Cost Curves Average Costs Marginal Costs Long run and Short Run.

Average product is the output per worker

Production and Costs. Economic versus Accounting Costs Economic costs are theoretical constructs which are intended to aid in rational decision-making.

Short-Run Production Costs. fixed input Any resource for which the quantity cannot change during the period of time under consideration.

CONTEMPORARY ECONOMICS© Thomson South-Western 5.3Production and Cost  Understand how marginal product varies as a firm hires more labor in the short run.

Cost Curve Model Chapter 13 completion. Costs of Production Fixed costs - do not change with quantity of output Variable costs - ↑ with quantity of output.

A.P. Microeconomics Daily: Draw & label no the same axis set, TFC, AFC & TVC.

1 © ©1999 South-Western College Publishing PowerPoint Slides prepared by Ken Long Principles of Economics 2nd edition by Fred M Gottheil.

Production Function and Costs Lesson The Production Function (54) The Production Function is the relationship between inputs to a business.

KRUGMAN'S MICROECONOMICS for AP* Firm Costs Margaret Ray and David Anderson Micro: Econ: Module.

Micro Review Day 2. Production and Cost Analysis I 12 Firms Maximize Profit For economists, total cost is explicit payments to the factors of production.

MANAGERIAL ECONOMICS COST ANALYSIS. In this chapter, look for answers to production and cost questions: What is a production function? What is marginal.

Chapter 7 Dr. Yuna Chen 1 © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use.

1 Module 14 Cost in the Short Run. Objectives:Objectives:  Understand the relationship between the short run production function and short run costs.

1 of 41 chapter: 12 >> Krugman/Wells Economics ©2009  Worth Publishers Behind the Supply Curve: Inputs and Costs.

Chapter 6 Production, Cost, and Profit © 2001 South-Western College Publishing.

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 8 Costs of Production 6/15/2018.

10 Businesses and the Costs of Production McGraw-Hill/Irwin

Cost Curve Model Chapter 13 completion.

Production & Costs in the Short-run

Module 55: Firm Costs.

წარმოების დანახარჯები

Businesses and the Costs of Production

Microeconomics Question #2.

Costs in the Short Run Three Costs Marginal Cost Average Total Cost

Economics Chapter 5: Supply.

Chapter 6 Production and Cost

McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Marginal product first rises due to increasing marginal returns and then falls due to diminishing marginal returns. Adding workers first increases output.

Costs of the individual firm

COSTS OF PRODUCTION General principle: If you know the technology of production (the production function or total product curve), and if you know the.

Presentation transcript:

Managerial Economics Short-Run Production Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is $3,600. What is marginal cost? What is average variable cost? How much output is being produced? What is average total cost? Is average variable cost increasing, constant, or decreasing? What about average total cost? Dr. C. Chen

Managerial Economics Short-Run Production Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is $3,600. a. What is marginal cost? The last worker (hired at the wage of $60, TC=$60) added 12 units of output (Q =12) MC=TC/ Q = $60/12=$5 b. What is average variable cost? AVC = VC/Q = $60*20/30*20 = $2 Dr. C. Chen

Managerial Economics Short-Run Production Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is $3,600. c. How much output is being produced? Q = 30*20 = 600 d. What is average total cost? ATC= TC/Q = (FC+VC)/Q = ($3,600+$60*20)/600 =$8 Dr. C. Chen

Managerial Economics Short-Run Production Suppose that a firm is currently employing 20 workers, the only variable input, at a wage rate of $60. The average product of labor is 30, the last worker added 12 units to total output, and total fixed cost is $3,600. e. Is average variable cost increasing, constant, or decreasing? What about average total cost? From the previous answers, we know that ATC ($8) > MC ($5) > AVC ($2). So, AVC is increasing but ATC is decreasing. On the next slide, ATC > MC > AVC occurs between Q2 and Q3. Dr. C. Chen

Short Run Average & Marginal Cost Curves (Figure 8.5)