Production,Total cost including implicit and explicit costs生产,总成本包括显性与隐性成本

1、ProductionCostsTotalProductioncost一Ineludesthetrueeconomiccostsofproduction(Thesumofexplicitandimplicitcosts).Economiccostsofproductionnotonlyincludeaccountingcostsbutalsotheopportunitycostsofproducingeachunitofoutput.Accountingcostsaretheexplicitcoststhatappearontheincomestatementincludingvariablea

2、ndfixedcosts.Theopportunitycostsconsistofanyimplicitcosts.Inordertobeprofitableabusinessneedstolookatallcostmeasures.Cost-cuttinginitiativesmayendupharmingabusinesssfutureprofitabilityiftheyarenotcareful.Itisagoodideatobaseinitiativesoneliminatingwasteorunprofitableactivitiesinlightofopportunitycost

3、(Koch).Implicitcosts一Donotincludedirectmonetarypayments,butaretheopportunitycostsofgivingupthebestalternative.Thesecostsareoftentimeshardtomeasure,becausetheydonothaveadirectdollarvalue.Managershavetorelyonresourcestomakeinformeddecisionsonimplicitcosts.Theseresourcescanincludethecompanysfinance,mar

4、keting,orlegaldepartments(Das).Example#1:Supposeyouleftyourjobasanaccountingclerkatafactorywith$40,000salaryinordertostartupyourowndelisubrestaurant(Deli-mart).Attheendofthefirstyear,youdeterminethecostofrunningDeli-Marttobe$30,000andrevenuestoequal$180,000.YourimplicitcostofstartingupDeli-Martequal

5、s$40,000.Yourimplicitcostis$40,000,whichistheamountyougaveupinordertostartupthedelibusiness.Explicitcosts一Aretheaccountingcostsdirectlypaidout-of-pocket(monetary)forthepurchaseofinputsorthehiringoflaborneededforproduction.Explicitcostsofproductionmayincludethecostofrawmaterials,equipment,andwages.Ex

6、ample#2:Asstatedinthepreviousexample,thecostsofrunningDeli-Martare$30,000.Thesecostsincludefoodsuppliesandwages.ThesearetheexplicitcostsofrunningDeli-Mart,becausetheyaredirectpaymentsneededtomakethedelissubs.Longrunaveragecosts(LRAC)Inthelongrunallproductioncostsarevariabletherearenofixedfactors.Fix

7、edfactorsdonotexist,becausethelongtimeallowsforallinputquantitiestochange(Tucker).Firmscanadjusttheirfactorsinthelongrunsothattheycanproduceataloweraveragecost.Thelongrunaveragecostcurveiscalledtheplanningcurve,becauseofthemodificationsafirmmakestolowercostsinthelongrun.Shortrunaveragecosts(SRAC)一In

8、theshortrun,costsincludethesumoffixedandvariablecosts.Fixedcostsarecoststhatdonotvarywithoutput,whilevariablecostsdovarywitheachunitofoutput.Variablecostscanbechanged,whilefixedcostsare“stuck”withcurrentinputs(Baye).Figure1hortvs.LongRunCurvesExample#3:SupposeeachoftheSRACcurvesinthefigureaboverepre

9、sentssmall,medium,andlargebuildingchoicesforDeli-mart.Inthelongrun,youmaychooseanyoneofthesebuildingsforyourDeli-martoperation,becausethiscurverepresentsthelowestcostperunitinwhichDeli-martcanproduceanynumberofsandwichesafteryoubuildanyofthethreebuildings.Since,youarejuststartingoutanddonothaveanypr

10、iordeliexperienceyoumightchoosethesmallerbuildingatSRACsforalowercostperunit.Afewyearslater,youmaychoosealargerbuildingatSRACL.Averagevariablecost一Isthetotalvariablecostdividedbythequantityofoutputproduced(TVC/Q).Infigure3below,thisaveragevariablecostcurveformsau-shape.Attheaveragevariablecostsminim

11、um,youwillseethemarginalcostcurveintersecting.WheremarginalcostisbelowAVC,AVCisfalling.WhenmarginalcostisaboveAVC,AVCisrising(Arnold).Averagetotalcostequalsthesumoftheaveragefixedcostsandtheaveragevariablecosts.Inthefigurebelow,youwillseethatastheaveragevariablecostsrisetheaveragetotalcostgetscloser

12、andcloser.InthelongrunAVCandATCendupmerging,becauseAFCdonotexist.QuantityofOutputFigure2-AverageVariableCostExample#4:Lookatthetablebelow;hereyoucanseeDeli-martscalculationofaveragevariablecostatthegivenquantitiesofoutput.Whenproducing200sandwichesamonthDeli-martsaveragecostis$2.20persandwich.Youwil

13、lfindthisbytakingthevariablecostof$440anddividingitbythequantityofoutputof200.Table1QuantityFixedCostVariableCostTotalCostAverageVariableCost100$1800$260$2060|$2.60200$1800$440$2240$2.20300$1800$600$2400$2.00400$1800$800$2600$2.00Calculation:=(Q)=(FC)=(VC)=(b+2Q)=VC/QMarginalcost一Isthecostincurredfr

14、omtheproductonofanadditionalunitofoutput(incrementalcost).Marginalcostcanbecalculatedbythechangeincostfromtheadditionalunitofoutputdividedbythechangeinquantityfromtheadditionalunitofoutput(=ATC/AQ).Marginalcostsareassociatedwithaspecificoutputchange(Koch).Initially,marginalcostoutputfalls,levelsouta

15、taminimum,andthenrisesthusformingaj-shape(Asshownbelowinfigure4)(Tucker).IntheScienceofSuccess,CharlesKochexplainsthatmostdecisionsshouldbemadeoffofmarginalanalysisbetweencostsandbenefits.Ifabusinesscanmakedecisionsontheappropriatemargins,itismorelikelytoeliminatewaste.QuantityofOutputFigure3-Margin

16、alCostExample#5:Whenlookingatthetablebelow,youcanseeDeli-martsaccountingcostsforthefirstmonthforthegivenquantities.Inordertofindthemarginalcostofproducing200sandwichesforthefirstmonthyouwillneedtofindthedifferencebetweenthechangeintotalcostsandtheadditionalunitsofoutput.Inordertocomeupwithamarginalc

17、ostof$1.80,youneedtofindthedifferenceintotalcostwhichequals$2240-$2060=$180.Next,youwilldivide$180bythechangeinquantity,whichis100sandwiches,andyouwillget$1.80.Table2QuantityFixedCostVariableCostTotalCostMarginalCost100$1800|$260$2060$2.60200$1800$440$2240$1.80300$1800$600$2400$1.60400$1800$800$2600

18、$2.00Calculation:=(Q)=(b)=($4Q)=(b+2Q)=ATCAQSunkcosts一AreFixedcosts,whicharelostoncetheyhavebeenpaid.Thereisnowaytorecoverasunkcostbecauseitislostforever.Therefore,sunkcostsshouldbeirrelevanttodecisionmakingonceincurred,becausethereisnowaytochangethedecision.Onlyvariablecostsarerelevantformakingdeci

19、sions.Amanagermustmakesuretoignoreallsunkcostsinordertomaximizetheirfirmsprofits(Baye).Thenaturalresourceindustryforinstancehashighinvestmentcosts.Thesecostsareinevitablysunkoncepaid.Therefore,thethreatofnewentrantstoKochIndustriesislow,becauseofthehighcostofinvestmentinmachineryandequipment(Koch).E

20、xample6:Youdecidetoleaseequipmentforyournewdelibusiness.Youhavepaid$1,800amonthforthelastthreemonthsfortherighttousethisequipment.However,duringthethirdmonthyouhadtocloseshopduetopersonaltravel.Inthesethreemonths,youincurred$5,400worthoffixedcosts.Eventhoughyoumadethedecisiontoclosedownforthethirdmo

21、nth,youarestillrequiredtopaythe$1,800paymentforyourleaseoftheequipment.Therefore,thethirdmonths$1,800paymentisasunkcost.Thiscostwaspaidandwasunrecoverableduetothetermsofyourlease.Example7:However,whatifyourfriendrequestedtousesomeofyourequipmentforhercateringbusinessthatthirdmonthwhileyouareonvacati

22、on.Sheknowsthatyouareusinghigh-techequipmentandwouldliketotryitoutwhileyouaregonetoseeifshewouldliketomakeherowninvestment.Inthiscase,yourbestdecisionwouldbetosubleaseyourequipmenttoyourfriendwhileyouaretravelingfor$800.Eventhoughasstatedabovesunkcostsareirrelevanttodecisionmaking,youwillstillaffect

23、yourbottomlineprofitwithyourdecision.Withthisexamplewouldyouratherlose$1,800duetoyourpersonaltraveloronly$800,becauseyoubecauseyoumadetheoptimaldecisiontosubleaseyourequipment?Mostinformedmanagerswouldchoosetosubleasetheirequipmenttomaximizeprofitsandincurthe$1,000sunkcost.MultipleChoice)Explicitcos

24、tsmayincludepaymentsto?EmployeesYoursupplierYourutilitycompanyAlloftheabove*Answer=D.Allareexplicitcosts,becausetheyaredirectmonetarypayments.)Supposeyouboughtatwo-storeybuildinganddecidedtoliveonthetopfloor,andrunDeli-martonthefirstfloor.Ifyouhadotherwiserentedonthefirstfloortosomeoneelse,youwouldh

25、avereceived$20,000inrentalincome.However,withtheoperationofDeli-martyouwereabletocoveryourcostsof$30,000fortheyearbymakingaprofitof$180,000.Fromthecostchoicesbelow,whatdoyoucallthecostofrentalincome($20,000)?VariablecostMarginalcostExplicitcostImplicitcost*Answer=D.Byusingthefirstfloorforyourowndeli

26、business,youarelosingtheincomethatyoucouldhavereceivedhadyourentedthefirstfloortosomeoneelse.)Whichcostcurvedoesnotcontainfixedfactorsofproduction?TotalcostcurveLong-runaveragecostcurveTotalfixedcostcurveShort-runaveragecostcurve*Answer=B.Long-runaveragecostdonotcontainfixedfactors,onlyvariable.)SupposeDeli-marthas