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DD209 Block 4 - Coggle Diagram

- - - - TC = PfF + PfF
        
        Labour and Kapital - TC = PlL + PkK
        
        Eg hourly wage / running cost
    - - AC = TC / Q
  - - - . all buyers and sellers (for example, consumers and firms) are small
        
        relative to the size of the market
        
        . all buyers and sellers are fully informed
        
        . products are homogeneous
        
        . there is free entry into and exit from the market.
- - - - Increasing returns to labour - underutilised equipment Diminishing returns to labour - overused equipment
        
        Marginal product of labour - adding staff affects the multiplier
      - Increasing variable inputs
        
        Labour, equiipment, raw materials
      - Cutting variable inputs - Expense budgets, travel costs, short-term contracts, unpaid leave
      - Unable to change quantity of at least one factor
  - - - Economies of scale
        
        Economies of increased dimension
        
        Curve flattens at Minimum Efficient Scale MES
        
        Low MES - Many firms able to join market (hairdressers)
        
        High MES - dominated by few firms (Energy)
        
        LRAC curve rises at Diseconomies of Scale
        
        LRAC shift - downwards shift, new technology
        
        Learning curve - AC vs Cumulative Output, open ended time
        
        Types of EOS
        
        Specialisation
        
        Economies of Increased Dimensions
        
        Indivisibility
      - Able to change all factors
    - - adopting new technologies
      - increasing output to gain from economies of scale
      - over time, reducing average cost from learning by doing
- - - - prices of inputs (into production)
      - technological progress
      - the number and size of firms (in the market)
      - substitutes and goods in joint supply
      - unexpected events.
  - - - incomes of consumers
      - the price of other goods
      - consumer preferences
      - socioeconomic factors
      - expected future prices.