Firms, Production and Costs

Tulsi Patel
Flashcards by Tulsi Patel, updated more than 1 year ago
Tulsi Patel
Created by Tulsi Patel over 4 years ago


Points for ECO3CHP1

Resource summary

Question Answer
What are firm's maximizing objectives? Profit maximization however some firms maximize sales, growth or managerial objectives.
What are PLC's Public limited company where there are thousands of shareholders who employ managers and executives to run the business.
Short run features One factor must be fixed, firms can increase output by adding more of a variable, firms cannot leave or enter the market.
Long run features No factors are fixed, output can be changed by altering the scale of the fop or increasing capacity, firms can enter and leave the market.
What are returns to scale When a firm increases a scale of a fop, three things can happen; - Increased returns where the is a more than proportionate increase - Decreased returns where there is a less than proportionate increase - Constant returns where change is exact
Marginal and Average curves - when marginal > the average, the average rises - when marginal < the average, the average falls - when marginal = the average, average is constant
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