Product transformation curve, Microeconomics

Assignment Help:

Production:

- Firms should choose how much of each to produce.

- The alternative quantities can be illustrated by using product transformation curves.

Product Transformation Curve

900_product transformation curve.png

* Observations

- Product transformation curves are sloped negatively

- Constant returns are there in this example

- As the production transformation curve is concave is joint production desirable?

- There is no direct relationship between economies of scope and economies of scale.

- May experience diseconomies of scale and economies of scope.

- May have the economies of scale and don't have economies of scope. 

* The degree of economies of scope measures savings in cost and can be given as:

1236_product transformation curve1.png

- C(Q1) is cost of producing Q1

- C(Q2) is cost of producing Q2

- C(Q1Q2) is joint cost of producing both products

* Interpretation:

- If SC > 0 -- Economies of scope

- If SC < 0 -- Diseconomies of scope

* Issues

- Truckload versus less than truck load

- Direct versus indirect routing

- Length of haul 


Related Discussions:- Product transformation curve

ELASTICITY, 2. Suppose the price of printing paper for digital cameras has ...

2. Suppose the price of printing paper for digital cameras has recently risen by 10 percent due to an increase in the cost of materials used in the finish for the paper. As a resu

Isoquant, if the price of labour is 2000 per hour and the price of capital ...

if the price of labour is 2000 per hour and the price of capital is 1000 per hour.is there an efficiency point of production.

Trends of national income, TRENDS OF NATIONAL INCOME: Estimates relati...

TRENDS OF NATIONAL INCOME: Estimates relating to India's national income and per capita income are available to us for each of the years beginning 1950-51. These estimates are

Explain and illustrate, explain and illustrate the changing demand for big ...

explain and illustrate the changing demand for big mac using indefference curve and budget line

Value additivity, V alue Additivity In an efficient market the valu...

V alue Additivity In an efficient market the value of any 2 assets can be estimated as the sum of the values of the two individual assets. This is a variation on the theme

Role of infrastructure in the economy, ROLE OF INFRASTRUCTURE IN THE ECONOM...

ROLE OF INFRASTRUCTURE IN THE ECONOMY: Economic Infrastructure produces services that directly facilitate and are basic to the carrying out of a wide variety of economic activ

Banking, what is fractional reserve and how does it affect money supply?

what is fractional reserve and how does it affect money supply?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd