BUS 207 Lecture Notes - Lecture 2: Experience Curve Effects, Switching Barriers, Retained Earnings

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 207
• Professor: Karen Ruckman

Document Summary

I(cid:374)dustrial s: more educ = better service jobs like bookkeeping that can be offered. [mr = mc] = [(mpl p) = w: how much the last worker hired contributes value-wise = wage paid. If w were to (cid:894)a(cid:374)d it"s the o(cid:374)l(cid:455) fop(cid:895), (cid:374)eed to l so mc > mr. 1+x by k & l: q = [c][k]a[l]b , inputs x, q1 = [c][{1 x}{k}]a[{1 x}{l}]b, q1 = (1 x)a+b ([c][k]a[l]b, q1 = (1 x)a+b q, possible outcomes: If (a+b) > 1, then q1 > (1 x)(q) increasing rts. If (a+b) = 1, then q1 = (1 x)(q) constant rts. If (a+b) < 1, then q1 < (1 x)(q) decreasing rts. I(cid:374)(cid:448)e(cid:374)tories & (cid:862)(cid:373)ass reser(cid:448)es(cid:863: as the plant lets larger, have to outsource and can do things in-house instead, e. g. having own repairman instead of outsourcing, cube-square rule & physical properties of production.