Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Dr Shalini Trivedi
Name of Institution
The Model
• Generation of profit over the time period being analyzed.
• Two time periods : Short run and long run
• There might be a conflict in profit maximization under two
terms might exist.
Examples are:
• Higher profits in the short run may in the long run induce
worker to demand high wages.
• Maximization of profit in the short run may give an impression
of a exploitative firm, this would affect long term profits.
• A firm trying to build up reputation might earn long term
profits.
• Firms can’t have independent periods.
Name of Institution
TR TC
TR TC
Condtion1 : 0
X X X
TR TC
or :
X X
MR MC
Name of Institution
Condtion 2 : 0
X X X 2 2
(TR ) (TC )
2 2
or :
X X2 2
MR MC
This Implies the slope of MR curve is less than the slope of MC curve.
Name of Institution
TC
Revenue and Cost K1
TR
K2
Q1 Q2 Q3
Profits
Q1 Q2
Q3
Name of Institution
• Two implications:
– Increasing organizational complexity meant that it
was impossible for the large firms to be managed
solely by the owner
• Teams of managers
• Functional divisions
– Impractical for the enterpreneur to finance solely
by personal resources
• Presence of capital markets
Name of Institution
MR = 0
where
Q = 50
MR = MC
where
Q = 40
Managerial Theories of the firm Name of Institution
• Max g= gd=gc
• Where
– Max g: Maximum Balanced growth
– Gd=growth rate of demand of products
– GC= growth rate of capital supply