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Micro Econ - Chapter 6

Accounting
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suppose TC = (2v + w)q^s. Explain how any desired value for economies of scale can be incorporated into this function by changing the parameter s.

Apr 14th, 2015
The production of transport services in most modes involves joint and common costs. A joint cost occurs when the production of one good inevitably results in the production of another good in some fixed proportion.Common costs arise when the facilities used to produce one transport service are also used to produce other transport services (e.g. when track or terminals used to produce freight services are also used for passenger services). The production of a unit of freight transportation does not, however, automatically lead to the production of passenger services. Thus, unlike joint costs, the use of transport facilities to produce one good does not inevitably lead to the production of some other transport service since output proportions can be varied.

The presence of economies at the relevant range of firm size means that the larger the size of the firm, the lower the per-unit cost of output. These economies of scale may potentially take a variety of forms in transportation services and may be thought to vary significantly according to the mode of transportation involved.

Apr 21st, 2015

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Apr 14th, 2015
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Apr 14th, 2015
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