{"id":1157,"date":"2015-05-11T23:09:28","date_gmt":"2015-05-11T23:09:28","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterymicro1xngcxmaster\/?post_type=chapter&#038;p=1157"},"modified":"2015-12-21T22:36:55","modified_gmt":"2015-12-21T22:36:55","slug":"putting-it-together-6","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/chapter\/putting-it-together-6\/","title":{"raw":"Putting It Together: Production","rendered":"Putting It Together: Production"},"content":{"raw":"<h2>Summary<\/h2>\r\nThe goal of this module was to explore the relationship between the inputs used in production, the resulting output and the cost of that output. \u00a0\u00a0You learned how to:\r\n<ul>\r\n\t<li>Define the term \u201cproduction\u201d and explain what a production function is<\/li>\r\n\t<li>Define and differentiate between marginal, average, and total product; compute and graph marginal, average, and total product<\/li>\r\n\t<li>Differentiate between explicit and implicit costs, accounting and\u00a0economic profit<\/li>\r\n\t<li>Define and differentiate between marginal, average, fixed, variable and total costs; compute and graph marginal, average, fixed, variable and total costs<\/li>\r\n\t<li>Differentiate between short-run and long-run costs<\/li>\r\n\t<li>Define and explain long-run costs<\/li>\r\n<\/ul>\r\n<h2>Examples<\/h2>\r\nThis module was detailed and complicated, but that\u2019s because production and cost issues are too. \u00a0There are a near infinite number of different types of businesses and many have a unique production process. \u00a0The local bakery down the street and Wonder bread don\u2019t operate the same way or at the same scale. \u00a0Neither does a home baker. \u00a0So each production process and costs of production are bound to be different.\r\n\r\n[caption id=\"attachment_2111\" align=\"aligncenter\" width=\"628\"]<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182200\/breadcoll.jpg\"><img class=\"wp-image-2111\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182200\/breadcoll.jpg\" alt=\"Three pictures. The first is of a large billboard for Wonder Bread, the second a cute corner bakery with a turquoise door, and the third of a middle-aged woman holding two freshly baked loaves of bread in her kitchen.\" width=\"628\" height=\"270\" \/><\/a> Bread Collage. <a href=\"https:\/\/www.flickr.com\/photos\/73577218@N00\/8418199506\/in\/photolist-dPTtqN-4kfH1w-9P2A57-7xCd6r-H2ftQ-9BE538-9ndAmb-pyvoDB-53kFsD-53pUtL-53pVeS-53kEBe-53pUZj-53pUph-53kFmv-chTaJo-cg7Qnb-53pUfC-562ajP-566kMY-566m2q-566mmG-562aHr-5629ZR-5629UF-566mQL-5629JD-562aun-a5DSpA-cg7JVh-cg7N9L-5BVCtM-aqzi5p-qdPCZc-qv6vUe-dvLUdk-e1UHEw-qsZbvo-qsZaT1-81GQ9R-4GexsK-6wjjdd-qsZ8KU-qvgiuD-qvcH2y-qvgnBX-qvgjGt-eFWxkb-6iKAAF-qjNtSL\">Memphis Wonder Bread Factory<\/a> by Mr. Littlehand, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY<\/a>.\u00a0<a href=\"https:\/\/www.flickr.com\/photos\/giuseppemilo\/14202669449\/in\/photolist-nD3oPc-ff3cfb-ff3dAC-ff3bq5\">Corner Bakery<\/a> by Guiseppi Milo, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY<\/a>.\u00a0<a href=\"https:\/\/www.flickr.com\/photos\/eraphernalia_vintage\/3003087158\/in\/photolist-5znBbN-6HShqN-6eaGG-DCPp6-4cVKJF-6DfEHh-7hDXUb-FrXGw-5Kamu-75x7x-iukzy6-r4M-aQiKpn-4BD23f-BgXLv-s3gZ9s-8yp8fQ-DCPad-5Aby8c-37v2-FrXGb-Nef-5So1Cw-7vDQaM-DCNTN-7yVzux-8QqGG-cLgLMy-o5qEiX-9pHjFU-7Yr885-qpcr4-5Vd8U3-hRYiDh-938gVs-6reoKT-3JQpww-P8dgC-5x9hFC-kFiRZU-hRXJLe-eUR1Vu-e5XvgA-6WbEeh-bUc1f1-8xwXod-hRYd4w-hjQsNm-pggxSf-e2N2YZ\">Home Baker<\/a> Cheryl, <a href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/2.0\/\">CC-BY-SA<\/a>[\/caption]\r\n\r\nWhat should you remember from this module?\r\n<ul>\r\n\t<li>Any change in the production process will cause a change in production cost.<\/li>\r\n\t<li>Average and marginal costs are per unit; Fixed, variable and total costs are just dollars spent on all units of output produced.<\/li>\r\n\t<li>Long-run costs are usually less than short-run costs because you have more options.<\/li>\r\n\t<li>Scale matters for some industries, but not others. The cost of producing electricity per kilowatt-hour is much less than the cost of using a home generator. But the cost of running a taxi business with 100 cabs is not much different than running the same business with 25 cabs.<\/li>\r\n<\/ul>\r\nLet\u2019s return to the question posed at the beginning of the module: How does an improvement in technology affect production and costs? \u00a0The answer is simple. An improvement in technology usually reduces the cost of producing a given quantity of output. In other words, a firm can produce the same amount of output at lower cost or more output for the same total cost. This can be shown graphically by an upward shift in the production curves (showing more Q for the same L) and by a downward (or rightward) shift in the cost curves (showing less cost for the same Q). Make sense?","rendered":"<h2>Summary<\/h2>\n<p>The goal of this module was to explore the relationship between the inputs used in production, the resulting output and the cost of that output. \u00a0\u00a0You learned how to:<\/p>\n<ul>\n<li>Define the term \u201cproduction\u201d and explain what a production function is<\/li>\n<li>Define and differentiate between marginal, average, and total product; compute and graph marginal, average, and total product<\/li>\n<li>Differentiate between explicit and implicit costs, accounting and\u00a0economic profit<\/li>\n<li>Define and differentiate between marginal, average, fixed, variable and total costs; compute and graph marginal, average, fixed, variable and total costs<\/li>\n<li>Differentiate between short-run and long-run costs<\/li>\n<li>Define and explain long-run costs<\/li>\n<\/ul>\n<h2>Examples<\/h2>\n<p>This module was detailed and complicated, but that\u2019s because production and cost issues are too. \u00a0There are a near infinite number of different types of businesses and many have a unique production process. \u00a0The local bakery down the street and Wonder bread don\u2019t operate the same way or at the same scale. \u00a0Neither does a home baker. \u00a0So each production process and costs of production are bound to be different.<\/p>\n<div id=\"attachment_2111\" style=\"width: 638px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182200\/breadcoll.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-2111\" class=\"wp-image-2111\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/05\/03182200\/breadcoll.jpg\" alt=\"Three pictures. The first is of a large billboard for Wonder Bread, the second a cute corner bakery with a turquoise door, and the third of a middle-aged woman holding two freshly baked loaves of bread in her kitchen.\" width=\"628\" height=\"270\" \/><\/a><\/p>\n<p id=\"caption-attachment-2111\" class=\"wp-caption-text\">Bread Collage. <a href=\"https:\/\/www.flickr.com\/photos\/73577218@N00\/8418199506\/in\/photolist-dPTtqN-4kfH1w-9P2A57-7xCd6r-H2ftQ-9BE538-9ndAmb-pyvoDB-53kFsD-53pUtL-53pVeS-53kEBe-53pUZj-53pUph-53kFmv-chTaJo-cg7Qnb-53pUfC-562ajP-566kMY-566m2q-566mmG-562aHr-5629ZR-5629UF-566mQL-5629JD-562aun-a5DSpA-cg7JVh-cg7N9L-5BVCtM-aqzi5p-qdPCZc-qv6vUe-dvLUdk-e1UHEw-qsZbvo-qsZaT1-81GQ9R-4GexsK-6wjjdd-qsZ8KU-qvgiuD-qvcH2y-qvgnBX-qvgjGt-eFWxkb-6iKAAF-qjNtSL\">Memphis Wonder Bread Factory<\/a> by Mr. Littlehand, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY<\/a>.\u00a0<a href=\"https:\/\/www.flickr.com\/photos\/giuseppemilo\/14202669449\/in\/photolist-nD3oPc-ff3cfb-ff3dAC-ff3bq5\">Corner Bakery<\/a> by Guiseppi Milo, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\">CC-BY<\/a>.\u00a0<a href=\"https:\/\/www.flickr.com\/photos\/eraphernalia_vintage\/3003087158\/in\/photolist-5znBbN-6HShqN-6eaGG-DCPp6-4cVKJF-6DfEHh-7hDXUb-FrXGw-5Kamu-75x7x-iukzy6-r4M-aQiKpn-4BD23f-BgXLv-s3gZ9s-8yp8fQ-DCPad-5Aby8c-37v2-FrXGb-Nef-5So1Cw-7vDQaM-DCNTN-7yVzux-8QqGG-cLgLMy-o5qEiX-9pHjFU-7Yr885-qpcr4-5Vd8U3-hRYiDh-938gVs-6reoKT-3JQpww-P8dgC-5x9hFC-kFiRZU-hRXJLe-eUR1Vu-e5XvgA-6WbEeh-bUc1f1-8xwXod-hRYd4w-hjQsNm-pggxSf-e2N2YZ\">Home Baker<\/a> Cheryl, <a href=\"https:\/\/creativecommons.org\/licenses\/by-sa\/2.0\/\">CC-BY-SA<\/a><\/p>\n<\/div>\n<p>What should you remember from this module?<\/p>\n<ul>\n<li>Any change in the production process will cause a change in production cost.<\/li>\n<li>Average and marginal costs are per unit; Fixed, variable and total costs are just dollars spent on all units of output produced.<\/li>\n<li>Long-run costs are usually less than short-run costs because you have more options.<\/li>\n<li>Scale matters for some industries, but not others. The cost of producing electricity per kilowatt-hour is much less than the cost of using a home generator. But the cost of running a taxi business with 100 cabs is not much different than running the same business with 25 cabs.<\/li>\n<\/ul>\n<p>Let\u2019s return to the question posed at the beginning of the module: How does an improvement in technology affect production and costs? \u00a0The answer is simple. An improvement in technology usually reduces the cost of producing a given quantity of output. In other words, a firm can produce the same amount of output at lower cost or more output for the same total cost. This can be shown graphically by an upward shift in the production curves (showing more Q for the same L) and by a downward (or rightward) shift in the cost curves (showing less cost for the same Q). Make sense?<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-1157\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: Steven Greenlaw and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":969,"menu_order":20,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"\",\"author\":\"Steven Greenlaw and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"48c6a6a1-91c9-4cd6-8159-15788c9b5b36","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-1157","chapter","type-chapter","status-publish","hentry"],"part":28,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1157","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/users\/969"}],"version-history":[{"count":12,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1157\/revisions"}],"predecessor-version":[{"id":4704,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1157\/revisions\/4704"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/parts\/28"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1157\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/media?parent=1157"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapter-type?post=1157"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/contributor?post=1157"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/license?post=1157"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}