10 - 11
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.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 17
Economies of Scale
The minimum efficient level of production is reached once the size of the market expands to a size large enough so that firms can take advantage of all economies of scale.
58
total cost
56
Minimum efficient
54
level of production
52
50
48
11 12 13 14 15 16 17 18 19 20 Quantity
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
The law of diminishing marginal productivity does not hold in the long run since all inputs are variable in the long run.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
It is the least-cost technically efficient process.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 7
Determinants of the Shape of the Long-Run Cost Curve
10 - 12
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.
10 - 14
Economies of Scale
Because of the importance of economies of scale, business people often talk of a minimum efficient level of production.
McGraw-Hill/Irwin
andCostAnalysisPartII(M-Grow-Hill,微 观经济学
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 2
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 5
Technical Efficiency and Economic Efficiency
Technical efficiency is a situation in which as few inputs as possible are used to produce a given output.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 13
Economies of Scale
Indivisible setup costs create many realworld economies of scale.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 9
ห้องสมุดไป่ตู้
A Typical Long-Run Average Total Cost Table
Total Costs Total Cost Total Costs = Average Total Quantity of Labor of Machines TCL + TCM Costs = TC/Q
Technical efficiency is efficiency that does not consider cost of inputs.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
In real-world production processes, economies of scale are extremely important at low levels of production.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 3
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 16
Economies of Scale
The minimum efficient level of production will be at the beginning of the constant returns portion of the average cost curve—where average total costs are at a minimum.
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 10
A Typical Long-Run Average Total Cost Curve
Costs per unit
$64
62
60
Average
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
10 - 15
Economies of Scale
The minimum efficient level of production is the amount of production that spreads setup costs out sufficiently for firms to undertake production profitably.
10 - 6
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.
11
$381
$254
$635
$58
12
390
260
650
54
13
402
268
670
52
14
420
280
700
50
15
450
300
750
50
16
480
320
800
50
17
510
340
850
50
18
549
366
915
51
19
600
400
1,000
53
20
666
444