BUS 207 Lecture Notes - Lecture 4: Monopsony, Bauxite, Reining

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 207
• Professor: Mark Moore

Document Summary

A measure of how much output is produced with a given amount of input(s) The higher the irm"s producivity relaive to its rivals, the lower are its unit costs. Higher producivity for a irm gives it a cost advantage over its rivals, and thus a compeiive advantage (if they pay the same prices for inputs) Represents the maximum output (q) that can be produced for every speciied combinaion of inputs (k, l, ), given the producion technology that exists. Represents the best engineering and management pracices available. During hte short-run, some inputs (e. g. capacity) are ixed. During the long-run, the irm can choose any combinaion of inputs. When economists refer to technical- or x-eiciency, they mean that a irm is operaing. On its producion funcion, without any waste or mismanagement. Moving from a point of x-eiciency to a point closer to the producion funcion will increase producivity (some companies do beter) Firm 1 is using l1 labor units to produce.