ECON10004 Lecture Notes - Lecture 11: Product Differentiation, Natural Monopoly, Monopolistic Competition
27 Jul 2018
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Strategies to minimise costs and intro to revenue. Atc key role in decision-making and key summary measure. Sr: share of fc/vc in tc and how srmc varies with output how atc varies with output. Lr: choice of production method used lr costs as minimum of sr costs. Low fc and high mc u-shaped sratc. High fc and constant mc decreasing sratc. Strategies to minimise costs - how to produce. Use smaller quantity of inputs to produce same output level. Reduce amount of time spent on unproductive activities (e. g. ) Find new (more efficient) production methods (e. g. ) internet technology. Strategies to minimise costs - cost of inputs. Make or buy decision should a firm produce an input or buy it from an outside supplier. Reasons to have inputs outsourced - cost of supply. Minimise costs of production by specialising in production activities. Outside supplier produces higher volume of an input. Competition between potential suppliers of the input may increase efficiency of production.
