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Lecture 19

ECON 1000 Lecture 19: Week 10

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Department
Economics
Course
ECON 1000
Professor
Nick Rowe
Semester
Fall

Description
Econ 1000 – Week 10 – Lecture 19  Costs curves are generally a U shape. o Due to the reason that diminishing returns and diminishing products the marginal costs will increase per unit produced.  Diminishing marginal product, it takes more resources to produce the extra apple.  Short run – when one resource is fixed  2Q = F(2L, 2N) – Constant Returns in Scale  Long run and short run ATCs meet on the middle points of the Short run curves.  Long run curves, have a decreasing slope.  Diseconomies of scale, decreasing returns to scale: the costs double as you double your outputs but the costs of a unit does not increase.  You can get diseconomies of scale, and if you cant find them you can replicate or repeat old models.  However, diseconomies of scale are hard to find. When firms are too big, they are hard to manage.  In market economies there are pockets of central planning, firms have people who manage different sections of economies.  The larger the firm in diseconomies of scale, as you increase the labour outputs and workers you need to increase the same amount plus more of bosses/ceos/managers.  Firms want to max profits, Firms take prices – they generally can’t influence the market price as long as there i
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