Production and Market Competition
Microeconomics Module 3 - Case Production, Costs, Profits Cost Profit in assignment, review reference material: Rittenberg Libby T. Tregarthen. (2009). Chapter 8: Production Costs. Sections 1-4 Principles Microeconomics.
Choice of factors of production
A firm's choice of factors of production to change will be determined by likely outcomes of the change. In the short run, a firm can only increase its variable cost. The required consideration in this case is marginal return. The needs to assess whether increasing a variable cost leads to; increasing marginal returns, diminishing marginal returns or negative marginal return. In the long run, a firm's production factors can all be changed. The firm will need to consider the marginal benefits and loses from capital or labor increments.
The considerations that the restaurant manager need to have is the likely change on its cost function. The manager should also be guided by the likely change in the marginal returns likely to be realized from a unit increase in labor. For the restaurant business considering adding a new grill and French fry machine would be advisable if there is spare capacity in the labor force and, the addition to this machinery will yield to increasing marginal returns. On the contrary, adding new machinery only where there is no spare labor force will yield underutilized capacity. This results to the firm having a higher average cost than marginal revenue.
Hiring too much labor with no increases in capital will in the short run increase a firm marginal benefit up to the point where the is no spare capacity to be utilized by added labor force. Should the restaurant employee to much labor force it will initially experience increasing marginal utility. This is the case where a unit increase in labor yields more than a unit increase in output....
economic costs are different from accounting costs and why a firm might still operate even when there is a loss. The best way to describe the differnce between economic costs and accounting costs is to break down the economic costs into explicit and implicit costs. 'Explicit costs" are all of those circumstances that require specific outlay of money such as paying employees, paying rent and utility bills. "Implicit costs" on the
Photovoltaic power system is a type of renewable energy that converts solar energy into solar photovoltaic electricity. Photovoltaic (PV) technology converts energy from the sunlight into the electricity. One of the advantages of the PV technology is that it is pollution free, and it is applicable with little maintenance. (EPIA 2008). Since sunlight is available free of charge, there has been an increase in the research and development (R&D) to make
In developing countries, consumers are more affected for two reasons. One is that consumers are more likely to buy raw ingredients. Without manufacturing entities to absorb some of the commodity price increases, consumers are left to absorb almost all of the increase (Ibid.). As a result, food prices have increased more in the developing world than in the developed world. Additionally, consumers in these countries already expend a significantly higher
Subway Supply and Demand Subway Corporation: Supply and Demand Subway Corporation: Supply and Demand Supply and demand of a good or service in economics is the basis for economic analysis in its entirety. Supply and demand centers on the different quantities that a producer or producers will make available to the market at different prices over a given period of time. The law of supply and demand is twofold. The law of supply functions
political scenario illustrated that governments all over the globe are making their immigration rules more stringent because of the rise in terrorism; the implication of this phenomenon is a decrease in international traveling, which endangers continuance of a number of airlines, including Nigeria's Arik Air (Eze, 2010). Hofstede's power distance dimension denotes the degree to which unequal distribution of power is anticipated and accepted by the lower ranking members
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