©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.chapterchaptertentenPreparedby:Fernando&YvonnQuijanoTechnology,Production,andCosts2of42©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER10:Technology,Production,andCostsAfterstudyingthischapter,youshouldbeableto:Definetechnologyandgiveexamplesofpositiveandnegativetechnologicalchange.Distinguishbetweentheeconomicshortrunandtheeconomiclongrun.Understandtherelationshipbetweenthemarginalproductoflaborandtheaverageproductoflabor.Explainandillustratetherelationshipbetweenmarginalcostandaveragetotalcost.Graphaveragetotalcost,averagevariablecost,averagefixedcost,andmarginalcost.Understandhowfirmsusethelong-runaveragecostcurvetoplan.SonyUsesaCostCurvetoDeterminethePriceofRadiosLEARNINGOBJECTIVES12345Inthischapter,wewillfocusontherelationshipbetweenafirm’stechnologyanditsproductioncosts.63of42©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER10:Technology,Production,andCostsTechnology:AnEconomicDefinitionLEARNINGOBJECTIVE1TechnologyTheprocessesafirmusestoturninputsintooutputsofgoodsandservices.TechnologicalchangeAchangeintheabilityofafirmtoproduceagivenlevelofoutputwithagivenquantityofinputs.4of42©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER10:Technology,Production,andCostsImprovingInventoryControlatWal-Mart10-1Betterinventorycontrolshavehelpedreducefirms’costs.5of42©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER10:Technology,Production,andCostsTheShortRunandtheLongRunShortrunTheperiodoftimeduringwhichatleastoneofthefirm’sinputsisfixed.LongrunAperiodoftimelongenoughtoallowafirmtovaryallofitsinputs,toadoptnewtechnology,andtoincreaseordecreasethesizeofitsphysicalplant.LEARNINGOBJECTIVE26of42©2006PrenticeHallBusinessPublishingEconomicsR.GlennHubbard,AnthonyPatrickO’Brien—1sted.CHAPTER10:T...
