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Welcome to
EC 209: Managerial
Economics- Group A
By: Dr. Jacqueline Khorassani
Study Guide
Week Seven
(Note: You must go over these slides and complete every
task outlined here before Thursday, October 18)
1
Don’t forget that
• Aplia Assignment 4
– Is due on Wednesday before 5 PM.
– Don’t miss it.
2
Long Run Production Function
• Isoquant
– What is it?
– Shape?
• Reasons for different shapes?
– What is the marginal rate of technical
substitution
• Why does it diminish?
3
Cost in long run
• Isocost
– What is it?
– Shape/slope?
• Reasons?
4
Cost minimization
• Rule?
• Graph?
• Optimal input substitution?
– Graph?
5
Cost function in the short run
• What are the different types of
costs?
– Graphs?
6
Cubic Cost Function
•
What is it?
7
Long Run Costs
• Economies/diseconomies of scale
– Sources?
– Graph?
8
Multi-Product Cost Function
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What are they?
What is the economies of scope?
What is cost complementarily?
What is the Quadratic Multi-Product Cost
Function?
9
You will now need to study
1. Papers by Jensen and Gibbons
– Available on Blackboard;
2. Chapter 6 of Baye
10
• What is manager’s role in an
organization?
• Describe the 3 methods of procuring
Inputs.
• What are transaction costs?
– What are specialized Investments?
• Types?
• Implications?
• What is Williamson’s Analysis?
• What are the factors influencing the
relative efficiency of market and firms?
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• What is a one-shot transaction?
• What is an ongoing supply relationship?
• What is the Principal-Agent Problem?
– Internal/external incentives
• What is the indifference curve approach to
managerial incentives?
• How can the problem between managers and
workers be solved?
• What are the managerial incentive schemes?
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Chapter 7 of Baye
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What is market structure?
What are the major structure variables?
What is the Four-Firm Concentration Ratio?
What is the Herfindahl-Hirschman Index (HHI)?
What are the limitations of concentration measures?
What is the Rothschild Index?
What is the Lerner Index?
What is the markup factor?
What is the Dansby-Willig Performance Index
13
Integration and Merger Activity
• What is Vertical Integration?
• What is Horizontal Integration?
• What is Conglomerate Mergers?
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