Chap13The-Costs-of-Production(曼昆经济学原理-微观-英文版)

1、The Costs of ProductionChapter 13Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.The Costs of ProductionThe La

2、w of Supply:Firms are willing to produce and sell a greater quantity of a good when the price of the good is high.This results in a supply curve that slopes upward.The Firms ObjectiveMaximum ProfitsThe economic goal of the firm is to maximize profits.A Firms Total Revenue and Total CostTotal Revenue

3、The amount that the firm receives for the sale of its output.Total CostThe amount that the firm pays to buy inputs.A Firms ProfitProfit is the firms total revenue minus its total cost.Profit = Total revenue - Total costCosts as Opportunity CostsA firms cost of production includes all the opportunity

4、 costs of making its output of goods and services.Explicit and Implicit CostsA firms cost of production include explicit costs and implicit costs.Explicit costs involve a direct money outlay for factors of production. Implicit costs do not involve a direct money outlay.Economic Profit versus Account

5、ing ProfitEconomists measure a firms economic profit as total revenue minus all the opportunity costs (explicit and implicit).Accountants measure the accounting profit as the firms total revenue minus only the firms explicit costs. In other words, they ignore the implicit costs.Economic Profit versu

6、s Accounting ProfitWhen total revenue exceeds both explicit and implicit costs, the firm earns economic profit.Economic profit is smaller than accounting profit.Economic Profit versus Accounting ProfitRevenueTotalopportunitycostsHow an EconomistViews a FirmExplicitcostsEconomicprofitImplicitcostsExp

7、licitcostsAccountingprofitHow an AccountantViews a FirmRevenueA Production Function and Total CostThe Production FunctionThe production function shows the relationship between quantity of inputs used to make a good and the quantity of output of that good.Marginal ProductThe marginal product of any i

8、nput in the production process is the increase in the quantity of output obtained from an additional unit of that input.Marginal ProductAdditional inputAdditional output=MarginalproductDiminishing Marginal ProductDiminishing marginal product is the property whereby the marginal product of an input d

9、eclines as the quantity of the input increases. Example: As more and more workers are hired at a firm, each additional worker contributes less and less to production because the firm has a limited amount of equipment. A Production Function.Quantity ofOutput(cookiesper hour)15014013012011010090807060

10、5040302010Number of Workers Hired012345Production functionDiminishing Marginal Product The slope of the production function measures the marginal product of an input, such as a worker.When the marginal product declines, the production function becomes flatter.From the Production Function to the Tota

11、l-Cost CurveThe relationship between the quantity a firm can produce and its costs determines pricing decisions.The total-cost curve shows this relationship graphically. A Production Function and Total CostHungry Helens Cookie FactoryTotal-Cost Curve.TotalCost$8070605040302010Quantity of Output(cook

12、ies per hour)020401401201008060Total-costcurveThe Various Measures of CostCosts of production may be divided into fixed costs and variable costs.Fixed and Variable CostsFixed costs are those costs that do not vary with the quantity of output produced.Variable costs are those costs that do change as

13、the firm alters the quantity of output produced.Family of Total CostsTotal Fixed Costs (TFC)Total Variable Costs (TVC)Total Costs (TC) TC = TFC + TVCFamily of Total CostsQuantityTotal CostFixed CostVariable Cost0$ 3.00$3.00$ 0.0013.303.000.3023.803.000.8034.503.001.5045.403.002.4056.503.003.5067.803

14、.004.8079.303.006.30811.003.008.00912.903.009.901015.003.0012.00Average CostsAverage costs can be determined by dividing the firms costs by the quantity of output produced. The average cost is the cost of each typical unit of product. Family of Average CostsAverage Fixed Costs (AFC)Average Variable

15、Costs (AVC)Average Total Costs (ATC)ATC = AFC + AVCFamily of Average Costs$3.00Family of Average CostsQuantityAFCAVCATC01$0.30$3.3021.500.401.9031.000.501.5040.750.601.3550.600.701.3060.500.801.3070.430.901.3380.381.001.3890.331.101.43100.301.201.50Marginal CostMarginal cost (MC) measures the amount

16、 total cost rises when the firm increases production by one unit.Marginal cost helps answer the following question:How much does it cost to produce an additional unit of output?Marginal CostMarginal CostTotal-Cost Curve.$0.00$2.00$4.00$6.00$8.00$10.00$12.00$14.00$16.00024681012Quantity of Output(gla

17、sses of lemonade per hour)Total CostTotal-cost curveATCAVCMCAverage-Cost and Marginal-Cost Curves.$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50024681012Quantity of Output(glasses of lemonade per hour) CostsAFCCost Curves and Their ShapesMarginal cost rises with the amount of output produced.This reflects

18、 the property of diminishing marginal product. Cost Curves and Their Shapes$0.00$0.50$1.00$1.50$2.00$2.50024681012Quantity of Output(glasses of lemonade per hour)CostsMCCost Curves and Their ShapesThe average total-cost curve is U-shaped.At very low levels of output average total cost is high becaus

19、e fixed cost is spread over only a few units.Average total cost declines as output increases.Average total cost starts rising because average variable cost rises substantially.Cost Curves and Their ShapesThe bottom of the U-shape occurs at the quantity that minimizes average total cost. This quantit

20、y is sometimes called the efficient scale of the firm.Cost Curves and Their Shapes$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50024681012Quantity of Output(glasses of lemonade per hour)Total CostsATCRelationship Between Marginal Cost and Average Total CostWhenever marginal cost is less than average total

21、cost, average total cost is falling.Whenever marginal cost is greater than average total cost, average total cost is rising.Relationship Between Marginal Cost and Average Total CostThe marginal-cost curve crosses the average-total-cost curve at the efficient scale. Efficient scale is the quantity th

22、at minimizes average total cost.MCATCRelationship Between Marginal Cost and Average Total Cost$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50024681012Quantity of Output(glasses of lemonade per hour) CostsThe Various Measures of CostIt is now time to examine the relationships that exist between the differen

23、t measures of cost.The Various Measures of Cost Big Bobs Bagel BinBig Bobs Cost Curves.$0.00$2.00$4.00$6.00$8.00$10.00$12.00$14.00$16.00$18.00$20.000246810121416Quantity of Output(bagels per hour)Total CostTotal Cost CurveAFCAVCMCBig Bobs Cost Curves.00.511.522.533.50246810121416Quantity of OutputCo

24、stsATCThree Important Properties of Cost CurvesMarginal cost eventually rises with the quantity of output.The average-total-cost curve is U-shaped.The marginal-cost curve crosses the average-total-cost curve at the minimum of average total cost.Costs in the Long RunFor many firms, the division of to

25、tal costs between fixed and variable costs depends on the time horizon being considered.In the short run some costs are fixed.In the long run fixed costs become variable costs.Costs in the Long RunBecause many costs are fixed in the short run but variable in the long run, a firms long-run cost curve

26、s differ from its short-run cost curves.Average Total Cost in the Short and Long Runs.Quantity ofCars per Day0AverageTotalCostATC in shortrun withsmall factoryATC in shortrun withmedium factoryATC in shortrun withlarge factoryATC in long runEconomies and Diseconomies of ScaleEconomies of scale occur

27、 when long-run average total cost declines as output increases.Diseconomies of scale occur when long-run average total cost rises as output increases.Constant returns to scale occur when long-run average total cost does not vary as output increases.Economies and Diseconomies of ScaleDiseconomiesof s

28、caleQuantity ofCars per Day0AverageTotalCostATC in long runEconomiesof scaleConstant Returnsto scaleSummaryThe goal of firms is to maximize profit, which equals total revenue minus total cost. When analyzing a firms behavior, it is important to include all the opportunity costs of production.Some op

29、portunity costs are explicit while other opportunity costs are implicit.SummaryA firms costs reflect its production process.A typical firms production function gets flatter as the quantity of input increases, displaying the property of diminishing marginal product.A firms total costs are divided bet

30、ween fixed and variable costs. Fixed costs dont vary with quantities produced; variable costs do.SummaryAverage total cost is total cost divided by the quantity of output.Marginal cost is the amount by which total cost would rise if output were increased by one unit.The marginal cost always rises wi

31、th the quantity of output.SummaryThe average-total-cost curve is U-shaped.The marginal-cost curve always crosses the average-total-cost curve at the minimum of ATC.A firms costs often depend on the time horizon being considered.Graphical ReviewEconomic Profit versus Accounting ProfitRevenueTotaloppo

32、rtunitycostsHow an EconomistViews a FirmExplicitcostsEconomicprofitImplicitcostsExplicitcostsAccountingprofitHow an AccountantViews a FirmRevenueA Production Function.Quantity ofOutput(cookiesper hour)150140130120110100908070605040302010Number of Workers Hired012345Production functionTotal-Cost Curv

33、e.TotalCost$8070605040302010Quantity of Output(cookies per hour)020401401201008060Total-costcurveTotal-Cost Curve.$0.00$2.00$4.00$6.00$8.00$10.00$12.00$14.00$16.00024681012Quantity of Output(glasses of lemonade per hour)Total CostTotal-cost curveAverage-Cost and Marginal-Cost Curves.ATCAVCMC$0.00$0.50$1.00$1.50$2.