微观经济学The Cost of Production.pptVIP

Chapter 7 Chapter 7 The Cost of Production Topics to be Discussed Measuring Cost: Which Costs Matter? Cost in the Short Run Cost in the Long Run Long-Run Versus Short-Run Cost Curves Topics to be Discussed Production with Two Outputs: Economies of Scope Dynamic Changes in Costs: The Learning Curve Estimating and Predicting Cost Introduction Production technology measures the relationship between input and output Production technology, together with prices of factor inputs, determine the firm’s cost of production Given the production technology, managers must choose how to produce Introduction The optimal, cost minimizing, level of inputs can be determined A firm’s costs depend on the rate of output and we will show how these costs are likely to change over time The characteristics of the firm’s production technology can affect costs in the long run and short run Measuring Cost:Which Costs Matter? For a firm to minimize costs, we must clarify what is meant by costs and how to measure them It is clear that if a firm has to rent equipment or buildings, the rent they pay is a cost What if a firm owns its own equipment or building? How are costs calculated here? Measuring Cost:Which Costs Matter? Accountants tend to take a retrospective view of firms’ costs, whereas economists tend to take a forward-looking view Accounting Cost Actual expenses plus depreciation charges for capital equipment Economic Cost Cost to a firm of utilizing economic resources in production, including opportunity cost Measuring Cost:Which Costs Matter? Economic costs distinguish between costs the firm can control and those it cannot Concept of opportunity cost plays an important role Opportunity cost Cost associated with opportunities that are foregone when a firm’s resources are not put to their highest-value use Opportunity Cost An Example A firm owns its own building and pays no rent for office space Does this mean the cost of office space is zero? The building could have been rented inst