In such a case, for this level of output the short run total cost when the firm is constrained to use k units of input 2 is equal to the long run total cost: STCx(y)(short run total cost) = TC(y)(total cost). We generally assume that for any level at which input 2 is fixed, there is some level of output for which that amount of input 2 is appropriate, so that for any value of x, TC(y)(total cost) = STCk(y)(short run total cost) for some y. For a total cost function with the typical shape, the following figure shows the relations between STC and TC. .
.
Long run and short run average cost functions.
Given the relation between the short and long run total costs, the short and long run average and marginal cost functions have the forms shown in the following figure. .
.
Note: .
• The SMC (short run marginal cost) goes through the minimum of the SAC (short run average cost) and the LMC (long run marginal cost) goes through the minimum of the LAC (long run average cost). .
• When SAC (short run average c cost) = LAC (long run average cost) we must have SMC (short run marginal cost) = LMC (long run marginal cost) (since slopes of total cost functions are the same there). .
In the case that the production function has, the LAC is horizontal, as in the following figure.
.
The differences between the short run and long run concepts.
Two distinctions between long and short run costs and supply:.
(1) Fixed costs do not matter in the short run. So, short-run shut-down point is different from the long-run shut-down point.
(2) The quantity of some inputs can be fixed in the short-run, but variable in the Long-run. Capital is often fixed in the short run.
Consider a firm with production function q = f (K; L). Suppose that capital is fixed in the short-run at the level k. Then, the firm's short-run production function is q = f (k; L). So, only labor is variable. Fixing q to Solve the equation q = f (k; L) for L.
Sun Micro System's DOT Sun Micro Systems, a Tech Giant, always seems to persuade its audience through powerful logical persuasion. ... At this point the commercial presents us with perfect common sense idea related to economics. ... Take an example of Microsoft or even Sun Micro Systems have used this ideology to dominate the Tech world almost single handedly. ...
Sociologists study the world of sociology with either a macro or micro level point of view. ... On the other hand, micro-level approaches closely follows symbolic interactionism theory which "looks at the meaning (the symbolic part) of daily social interaction of individuals " (Steckley, 2014, p.33). ... Based on the in class discussion, micro individual-level factors had clearly prevailed over the societal-level factors when explaining the cause of student attrition. During the class discussion, we determined the macro-level issues included economics, cultural expectations, and structural i...
The Micro and Macro Environments: What they are and what the difference is between them. A company's marketing environment consists of the actors and forces outside marketing that affect marketing management's ability to develop and maintain successful transactions with its target customer...
The economics involved with sports has drastically changed over the last ten years. ... There are many aspects that are involved with the economics of sport. ... Economics is the study of how best to allocate scarce resources among competing uses (The Micro Economy Today Bradley R. ... Economics is concerned with the production and use of goods and services. ... The study of the manner in which choices are made is one of the central themes of economics (Basic Economics Richard S. ...
As a professor of economics at Chittagong University in Bangladesh, Yunus took his students for numerous trips to a poor town in Bangladesh called Jobra to learn about poverty. ... To be able to carry out his passion he would have to come up with his own theories and re-learn economics that would help him alleviate poverty (Yunus, 2007). ... By assisting micro borrowers and micro savers to build up companies and take ownership or large enterprises, Grameen is slowly trying to overcome poverty. ... The very way Muhammad has set up the idea of micro-credit and the micro-credit economic model als...
As a professor of economics at Chittagong University in Bangladesh, Yunus took his students for numerous trips to a poor town in Bangladesh called Jobra to learn about poverty. ... To be able to carry out his passion he would have to come up with his own theories and re-learn economics that would help him alleviate poverty (Yunus, 2007). ... By assisting micro borrowers and micro savers to build up companies and take ownership or large enterprises, Grameen is slowly trying to overcome poverty. ... The very way Muhammad has set up the idea of micro-credit and the micro-credit economic model al...
The idea of exchange theory has been applied to micro, meso, and macro levels of society. Originally this concept was mainly integrated within micro systems, but it was eventually able to be analyzed among a larger societal structure. "One basic thesis in exchange theory (at both micro and macro levels) is that uneven exchange leads to power of one party over another. ... In contrast to that, the exchange theory's derivatives seem to stem from behavioral psychology, functional anthropology, and utilitarian economics. ... Canda, Chatterjee, and Robbins (1998) suggests that the theory of...
Although errors and contradictory theories can be found in his writings, which are excellent catalysts for discussion, it is the focus of this paper to establish Marx's fundamental influence regarding modern-day politics and economics. ... He supports his theory by analogizing and comparing democracy to economics; saying the world had to be run from both a micro-economic stance (economics from an individualist view) and from a macro-economic stance (economics from a global view). ...
As a result of the cyclical nature of economics it is inevitable that the once powerful Asian economies will again come back into power. ... These facts when taken into account with European control of trade routes and everyone else's narrow Eurocentric, micro view of world economic development make up Franks view of the development of global trade and economic history. ... Perhaps if ReOrient was based on solid, disputable evidence and Frank had present it in a manner that those without an extensive background in world economic development could absorb, the book could have had the des...
This brings us to the principle of economics, supply and demand. ... The negative effects of credit have been described on a micro economic scale. ... It plays an important role in personal economics as well as the economy of the United States. ...
