andcostanalysispartii(m-grow-hill,微观经济学.pptVIP

Production and Cost Analysis: Part II Chapter 10 Laugher Curve Economists have forecasted nine out of the last 15 recessions. Making Long-Run Production Decisions To make their long-run decisions, firms look at costs of various inputs and the technologies available for combining these inputs, and then decide which combination offers the lowest cost. Making Long-Run Production Decisions The firm makes long-run decisions on the basis of the expected costs, and expected usefulness, of inputs. Technical Efficiency and Economic Efficiency Technical efficiency is a situation in which as few inputs as possible are used to produce a given output. Technical efficiency is efficiency that does not consider cost of inputs. Technical Efficiency and Economic Efficiency The economically efficient method of production is that method that produces a given level of output at the lowest possible cost. Determinants of the Shape of the Long-Run Cost Curve The law of diminishing marginal productivity does not hold in the long run since all inputs are variable in the long run. Determinants of the Shape of the Long-Run Cost Curve The shape of the long-run cost curve is due to the existence of economies and diseconomies of scale. A Typical Long-Run Average Total Cost Table A Typical Long-Run Average Total Cost Curve Economies of Scale There are economies of scale in production when the per-unit output cost decreases as output increases when all inputs are changeable. In real-world production processes, economies of scale are extremely important at low levels of production. Economies of Scale An indivisible setup cost is the cost of an indivisible input for which a certain minimum amount of production must be undertaken before the input becomes economically feasible to use. Economies of Scale Indivisible setup costs create many real-world economies of scale. Economies of Scale Because of the importance of economies of scale, business people often talk of a minimum efficient level of produc