国外厂商理论讲稿课件

TheTheoryoftheFirmTheTheoryoftheFirm1TheTheoryoftheFirmTheTheoryoftheFirm2ProductionFunctionProductionFunction3ProductionFunctionStatestherelationshipbetweeninputsandoutputs.Inputs–thefactorsofproductionclassifiedas:Land–allnaturalresourcesoftheearth–notjust‘terrafirma’!Pricepaidtoacquireland=RentLabour–allphysicalandmentalhumaneffortinvolvedinproduction.Pricepaidtolabour=WagesCapital–buildings,machineryandequipmentnotusedforitsownsakebutforthecontributionitmakestoproduction.Pricepaidforcapital=InterestProductionFunctionStatesthe4ProductionFunctionInputsProcessOutputLandLabourCapitalProductorservicegenerated–valueaddedProductionFunctionInputsProce5AnalysisofProductionFunction:

ShortRunIntheshortrunatleastonefactorfixedinsupplybutallotherfactorscapableofbeingchanged.Reflectswaysinwhichfirmsrespondtochangesinoutput(demand).Canincreaseordecreaseoutputusingmoreorlessofsomefactorsbutsomelikelytobeeasiertochangethanothers.IncreaseintotalcapacityonlypossibleinthelongrunAnalysisofProductionFunctio6AnalysisofProductionFunction:

ShortRunIntimesofrisingsales(demand)firmscanincreaselabourandcapitalbutonlyuptoacertainlevel–theywillbelimitedbytheamountofspace.Inthisexample,landisthefixedfactorwhichcannotbealteredintheshortrun.AnalysisofProductionFunctio7AnalysisofProductionFunction:

ShortRunIfdemandslowsdown,thefirmcanreduceitsvariablefactors–inthisexampleitreducesitslabourandcapitalbutagain,landisthefactorwhichstaysfixed.AnalysisofProductionFunctio8AnalysisofProductionFunction:

ShortRunIfdemandslowsdown,thefirmcanreduceitsvariablefactors–inthisexample,itreducesitslabourandcapitalbutagain,landisthefactorwhichstaysfixed.AnalysisofProductionFunctio9AnalysingtheProductionFunction:LongRunThelongrunisdefinedastheperiodoftimetakentovaryallfactorsofproduction.Bydoingthis,thefirmisabletoincreaseitstotalcapacity–notjustshorttermcapacityAssociatedwithachangeinthescaleofproductionTheperiodoftimevariesaccordingtothefirmandtheindustry.Inelectricitysupply,thetimetakentobuildnewcapacitycouldbemanyyears;foramarketstallholder,the‘longrun’couldbeaslittleasafewweeksormonths!AnalysingtheProductionFunct10AnalysisofProductionFunction:

LongRunInthelongrun,thefirmcanchangeallitsfactorsofproductionthusincreasingitstotalcapacity.Inthisexampleithasdoubleditscapacity.AnalysisofProductionFunctio11ProductionFunctionMathematicalrepresentationoftherelationship:Q=f(K,L,La)Output(Q)isdependentupontheamountofcapital(K),Land(L)andLabour(La)used.ProductionFunctionMathematica12CostsCosts13CostsInbuyingfactorinputs,thefirmwillincurcostsCostsareClassifiedas:Fixedcosts–coststhatarenotrelateddirectlytoproduction–rent,rates,insurancecosts,admincosts.Theycanchangebutnotinrelationtooutput.VariableCosts–costsdirectlyrelatedtovariationsinoutput.Rawmaterialsprimarily.CostsInbuyingfactorinputs,14CostsTotalCost-

thesumofallcostsincurredinproductionTC=FC+VCAverageCost–thecostperunitofoutputAC=TC/OutputMarginalCost–thecostofonemoreoronefewerunitsofproductionMC

=TCn–TCn-1unitsCostsTotalCost-thesumofa15CostsShortrun–DiminishingmarginalreturnsresultsfromaddingsuccessivequantitiesofvariablefactorstoafixedfactorLongrun–Increasesincapacitycanleadtoincreasing,decreasingorconstantreturnstoscaleCostsShortrun–Diminishingm16RevenueRevenue17RevenueTotalrevenue–thetotalamountreceivedfromsellingagivenoutputTR=PxQAverageRevenue–theaverageamountreceivedfromsellingeachunitAR=TR/QMarginalrevenue–theamountreceivedfromsellingoneextraunitofoutputMR=TRn–TRn-1unitsRevenueTotalrevenue–thetot18ProfitProfit19ProfitProfit=TR–TCTherewardforenterpriseProfitshelpintheprocessofdirectingresourcestoalternativeusesinfreemarketsRelatingpricetocostshelpsafirmtoassessprofitabilityinproductionProfitProfit=TR–TC20ProfitNormalProfit–theminimumamountrequiredtokeepafirminitscurrentlineofproductionAbnormalorSupernormalprofit–profitmadeoverandabovenormalprofitAbnormalprofitmayexistinsituationswherefirmshavemarketpowerAbnormalprofitsmayindicatetheexistenceofwelfarelossesCouldbetaxedawaywithoutalteringresourceallocationProfitNormalProfit–themini21ProfitSub-normalProfit–profitbelownormalprofitFirmsmaynotexitthemarketevenifsub-normalprofitsmadeiftheyareabletocovervariablecostsCostofexitmaybehighSub-normalprofitmaybetemporary(orperceivedassuch!)ProfitSub-normalProfit–prof22ProfitAssumptionthatfirmsaimtomaximiseprofitMaynotalwaysholdtrue-thereareotherobjectivesProfitmaximisingoutputwouldbewhereMC=MRProfitAssumptionthatfirmsai23ProfitWhy?Cost/RevenueOutputMRMR–theadditiontototalrevenueasaresultofproducingonemoreunitofoutput–thepricereceivedfromsellingthatextraunit.MCMC–ThecostofproducingONEextraunitofproduction100Assumeoutputisat100units.TheMCofproducingthe100thunitis20.TheMRreceivedfromsellingthat100thunitis150.Thefirmcanaddthedifferenceofthecostandtherevenuereceivedfromthat100thunittoprofit(130)20150TotaladdedtoprofitIfthefirmdecidestoproduceonemoreunit–the101st–theadditiontototalcostisnow18,theadditiontototalrevenueis140–thefirmwilladd128toprofit.–itisworthexpandingoutput.10118140Addedtototalprofit30120AddedtototalprofitTheprocesscontinuesforeachsuccessiveunitproduced.ProvidedtheMCislessthantheMRitwillbeworthexpandingoutputasthedifferencebetweenthetwoisADDEDtototalprofit10240145104103ReducestotalprofitbythisamountIfthefirmweretoproducethe104thunit,thislastunitwouldcostmoretoproducethanitearnsinrevenue(-105)thiswouldreducetotalprofitandsowouldnotbeworthproducing.TheprofitmaximisingoutputiswhereMR=MCProfitWhy?Cost/RevenueOutputMR24TheTheoryoftheFirmTheTheoryoftheFirm25TheTheoryoftheFirmTheTheoryoftheFirm26ProductionFunctionProductionFunction27ProductionFunctionStatestherelationshipbetweeninputsandoutputs.Inputs–thefactorsofproductionclassifiedas:Land–allnaturalresourcesoftheearth–notjust‘terrafirma’!Pricepaidtoacquireland=RentLabour–allphysicalandmentalhumaneffortinvolvedinproduction.Pricepaidtolabour=WagesCapital–buildings,machineryandequipmentnotusedforitsownsakebutforthecontributionitmakestoproduction.Pricepaidforcapital=InterestProductionFunctionStatesthe28ProductionFunctionInputsProcessOutputLandLabourCapitalProductorservicegenerated–valueaddedProductionFunctionInputsProce29AnalysisofProductionFunction:

ShortRunIntheshortrunatleastonefactorfixedinsupplybutallotherfactorscapableofbeingchanged.Reflectswaysinwhichfirmsrespondtochangesinoutput(demand).Canincreaseordecreaseoutputusingmoreorlessofsomefactorsbutsomelikelytobeeasiertochangethanothers.IncreaseintotalcapacityonlypossibleinthelongrunAnalysisofProductionFunctio30AnalysisofProductionFunction:

ShortRunIntimesofrisingsales(demand)firmscanincreaselabourandcapitalbutonlyuptoacertainlevel–theywillbelimitedbytheamountofspace.Inthisexample,landisthefixedfactorwhichcannotbealteredintheshortrun.AnalysisofProductionFunctio31AnalysisofProductionFunction:

ShortRunIfdemandslowsdown,thefirmcanreduceitsvariablefactors–inthisexampleitreducesitslabourandcapitalbutagain,landisthefactorwhichstaysfixed.AnalysisofProductionFunctio32AnalysisofProductionFunction:

ShortRunIfdemandslowsdown,thefirmcanreduceitsvariablefactors–inthisexample,itreducesitslabourandcapitalbutagain,landisthefactorwhichstaysfixed.AnalysisofProductionFunctio33AnalysingtheProductionFunction:LongRunThelongrunisdefinedastheperiodoftimetakentovaryallfactorsofproduction.Bydoingthis,thefirmisabletoincreaseitstotalcapacity–notjustshorttermcapacityAssociatedwithachangeinthescaleofproductionTheperiodoftimevariesaccordingtothefirmandtheindustry.Inelectricitysupply,thetimetakentobuildnewcapacitycouldbemanyyears;foramarketstallholder,the‘longrun’couldbeaslittleasafewweeksormonths!AnalysingtheProductionFunct34AnalysisofProductionFunction:

LongRunInthelongrun,thefirmcanchangeallitsfactorsofproductionthusincreasingitstotalcapacity.Inthisexampleithasdoubleditscapacity.AnalysisofProductionFunctio35ProductionFunctionMathematicalrepresentationoftherelationship:Q=f(K,L,La)Output(Q)isdependentupontheamountofcapital(K),Land(L)andLabour(La)used.ProductionFunctionMathematica36CostsCosts37CostsInbuyingfactorinputs,thefirmwillincurcostsCostsareClassifiedas:Fixedcosts–coststhatarenotrelateddirectlytoproduction–rent,rates,insurancecosts,admincosts.Theycanchangebutnotinrelationtooutput.VariableCosts–costsdirectlyrelatedtovariationsinoutput.Rawmaterialsprimarily.CostsInbuyingfactorinputs,38CostsTotalCost-

thesumofallcostsincurredinproductionTC=FC+VCAverageCost–thecostperunitofoutputAC=TC/OutputMarginalCost–thecostofonemoreoronefewerunitsofproductionMC

=TCn–TCn-1unitsCostsTotalCost-thesumofa39CostsShortrun–DiminishingmarginalreturnsresultsfromaddingsuccessivequantitiesofvariablefactorstoafixedfactorLongrun–Increasesincapacitycanleadtoincreasing,decreasingorconstantreturnstoscaleCostsShortrun–Diminishingm40RevenueRevenue41RevenueTotalrevenue–thetotalamountreceivedfromsellingagivenoutputTR=PxQAverageRevenue–theaverageamountreceivedfromsellingeachunitAR=TR/QMarginalrevenue–theamountreceivedfromsellingoneextraunitofoutputMR=TRn–TRn-1unitsRevenueTotalrevenue–thetot42ProfitProfit43ProfitProfit=TR–TCTherewardforenterpriseProfitshelpintheprocessofdirectingresourcestoalternativeusesinfreemarketsRelatingpricetocostshelpsafirmtoassessprofitabilityinproductionProfitProfit=TR–TC44ProfitNormalProfit–theminimumamountrequiredtokeepafirminitscurrentlineofproductionAbnormalorSupernormalprofit–profitmadeoverandabovenormalprofitAbnormalprofitmayexistinsituationswherefirmshavemarketpowerAbnormalprofitsmayindicatetheexistenceofwelfarelossesCouldbetaxedawaywithoutalteringresourceallocationProfitNormalProfit–themini45ProfitSub-normalProfit–profitbelownormalprofitFirmsmaynotexitthemarketevenifsub-normalprofitsmadeiftheyareabletocovervariablecostsCostofexitmaybehighSub-normalprofitmaybetemporary(orperceivedassuch!)ProfitSub-normalProfit–prof46ProfitAssumptionthatfirmsaimtomaximiseprofitMaynotalwaysholdtrue-thereareotherobjectivesProfitmaximisingoutputwouldb