Product transformation curve, Microeconomics

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 

Posted Date: 10/12/2012 3:54:19 AM | Location : United States







Related Discussions:- Product transformation curve, Assignment Help, Ask Question on Product transformation curve, Get Answer, Expert's Help, Product transformation curve Discussions

Write discussion on Product transformation curve
Your posts are moderated
Related Questions
Capital Account: The capital account deals with long and short-term capital movement.These capital movements are referred to as autonomous because they take place for business o

uses of time series in indian economy

Consider a family saving function for the population of all families in the United States: sav = β 0 + β 1 inc + β 2 hhsize + β 3 educ + β 4 age + u where hhsize is househol

FACTORS RESPONSIBLE FOR POLICY FAILURES: It is the subject of many official and academic studies to try and find out the reasons for the inability of many, in fact, most of th

subsitution effect dominate tha income effect in which good case?

Differentiate between real and nominal variables.  In economics, the distinction among nominal and real numbers is often made. Nominal variables -- like nominal wages, interest

The definition of a price maker is a "firm with some power to set the price because the demand curve for its output slopes downward", which in effect, means those firms with a down

how to calculate the volume of exports? or what is the definition?

In markets, the invisible hand allocates resources efficiently a. in all cases b. when there are positive externalities, but not when there are negative externalities c. when there

what are the various types of cost curves?