Difficulties in measuring cost, Microeconomics

Difficulties in Measuring Cost

 1) Output data may represent an aggregate of different type of products.

 2) Cost data may not include opportunity cost.

  3) Allocating cost to a particular product may be difficult when there is more than one product line.

* Cost Functions and the Measurement of Scale Economies

- Scale Economy Index (SCI)

  • EC = 1, SCI = 0: neither economies nor diseconomies of scale
  • EC > 1, SCI is negative: diseconomies of scale
  • EC < 1, SCI is positive: economies of scale
Posted Date: 10/12/2012 4:14:07 AM | Location : United States

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