Summary of Economics of Strategy Book Essay - 1539 Words

Chapter 1, Basic Microeconomic principles TC function: Represent the relationship between total cost and output, assuming that the firm produces in the most efficient manner possible given its current technological capabilities. Semifixed: fixed over certain ranges of output but variable over other ranges AC(Q): average cost function; describes how the firms average cost function or per unit of output costs vary with the amount of output it produces. ïÆ'   When average costs decreases as output increases, there are economies of scale Margincal cost: refers to the rate of change of total cost with respect to outputïÆ'   the incremental cost of producing exactly one more unit of output. Margincal cost often depeds on the total volume†¦show more content†¦If you produce a lower quantity of output it could be that you should use another technology than someone who produces a large amount of output Short-run economies of scale: reductions in average costs due to increase in capacity utilization in that occur within a plant of a given size Long-run economies of scale: reductions due to adaption of a technology that has high fixed costs but lower variable costs Indivisibilities are more likely when production is capital intensive: Capital intensive: when the costs of productive capital such as factories and assembly lines represent a signifi-cant percentage of total costs. 2)Increased productivity of variable inputs (mainly having to do with specialization) Materials or labor intensive: when most production expenses go to raw materials or labor (are variable, variable costs) â€Å"the division of labor is limited by the extent of the market: division of labor: refers to the specialization of productiveShow MoreRelatedApple Chairman Statement and Reflective Writing Essay1451 Words   |  6 PagesSection 1: A draft Executive Summary Apple Inc. is a multiplier company. 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