Chương 3

Phân tích hàm sản xuất và hàm

chi phí

Presenter: Vo Hoang Kim An

Foreign Trade University – Hochiminh City – Vietnam
 Các định nghĩa cơ bản

◎ Yếu tố sản xuất đầu vào có thể được xem là biến đổi hay cố
định tuỳ thuộc vào mức độ dễ dàng thay đổi của chúng
◎ Đầu vào biến đổi
○ Yếu tố đầu vào có mức độ sử dụng có thể được thay đổi dễ dàng

◎ Đầu vào cố định

○ Một đầu vào mà mức độ sử dụng không thể thay đổi dễ dàng và vẫn
phải chi trả ngay cả khi không sản xuất, bán được sản phẩm nào

8-2
 Các định nghĩa cơ bản

◎ Ngắn hạn
○ Có ít nhất một yếu tố đầu vào cố định
○ Tất cả những thay đổi về sản lượng đầu ra được tạo
ra bởi việc sử dụng đầu vào biến đổi
◎ Dài hạn
○ Tất cả các đầu vào là biến đổi
○ Đầu ra thay đổi do sự thay đổi của tất cả các yếu tố
đầu vào
8-3
 Hàm sản xuất ngắn hạn
◎ Trong ngắn hạn, chi phí vốn cố định
○ Sự thay đổi yếu tố đầu ra được tạo ra bởi yếu tố lao
động
◎ Hàm sản xuất ngắn hạn

8-4
1.
Sản xuất và chi phí
trong ngắn hạn

5
 Sản phẩm trung bình và sản phẩm cận biên

◎ Sản phẩm trung bình của lao động

○ AP = Q/L
◎ Sản phẩm biên của lao động
○ MP = ΔQ/ΔL
◎ Khi sản phẩm trung bình của lao động đạt cực đại:
○ AP = MP
◎ Quy luật sản phẩm cận biên giảm dần
○ Mỗi đơn vị yếu tố sản xuất tăng thêm sẽ bổ sung ít
hơn vào tổng sản lượng so với các đơn vị trước
8-6
 Các đường tổng sản phẩm, sản
phẩm trung bình, và sản phẩm biên
o Sản phẩm biên tăng: Giai
đoạn có sản phẩm biên tăng
khi đầu vào tăng
o Sản phẩm biên giảm: Giai
đoạn sản phẩm biên giảm khi
đầu vào tăng.
o Sản phẩm biên âm: Giai đoạn
sản phẩm biên mang giá trị âm
khi đầu vào tăng lên.

8-7
Vai trò của người quản lý trong
quá trình sản xuất

8-8
 Mức yếu tố đầu vào tối
đa hoá lợi nhuận
Để tối đa hoá lợi nhuận, một nhà quản lý nên sử dụng mức yếu
tố đầu vào mà tại đó lợi ích biên bằng lợi chi phí biên. Cụ thể,
khi chi phí của mỗi đơn vị lao động là w, Nhà quản lý nên tiếp
tục thuê lao động tới mức mà tại đó VMPL = w trong khoảng có
sản phẩm biên giảm dần

9
 Hàm chi phí sản xuất ngắn hạn

◎ Tổng chi phí biến đổi (TVC)

○ Chi phí của yếu tố đầu vào biến đổi
○ Tăng khi sản lượng đầu ra tăng
◎ Tổng chi phí cố định (TFC)
○ Chi phí của yếu tố đầu vào cố định
○ Không thay đổi khi đầu ra tăng
◎ Tổng chi phí (TC)
○ TC = TVC + TFC
8-10
 Short-Run Total Cost Schedules

Output (Q) Total fixed cost Total variable Total Cost

(TFC) cost (TVC) (TC=TFC+TVC)
0 $6,000 $ 0 $ 6,000
100 6,000 4,000 10,000
200 6,000 6,000 12,000
300 6,000 9,00 15,000
0
14,000 20,000
400 6,000
500 6,000 22,000 28,000
600 6,000 34,000 40,000

8-11
Các đường tổng chi phí

8-12
 Chi phí trung bình
• Chi phí biến đổi trung bình

• Chi phí cô định trung bình

• Tổng chi phí trung bình

8-13
 Chi phí biên ngắn hạn

◎ Chi phí biên ngắn hạn (SMC) đo lường sự

thay đổi trong tổng chi phí (TC) khi sản
lượng đầu ra thay đổi

8-14
 Average & Marginal Cost Schedules

Output Average Average Average total Short-run

(Q) fixed cost variable cost cost marginal cost
(AFC=TFC/Q (AVC=TVC/Q) (ATC=TC/Q= (SMC=ΔTC/ΔQ)
) AFC+AVC)
0 -- -- -- --
$100
100 $60 $40 $40
200 30 30 60 20
300 20 30 50 30
400 15 35 50 50
500 12 44 56 80
600 10 56.7 66.7 120

8-15
Các đường chi phí trung bình và
chi phí biên

8-16
Các đường chi phí trung bình và
chi phí biên

8-17
 Các mối quan hệ giữa các đường
chi phí trung bình

◎ AFC giảm khi sản lượng tăng

○ Bằng khoảng cách giữa ATC & AVC
◎ AVC có dạng chữ U ngược (U-shaped)
○ Bằng SMC tại điểm thấp nhất của AVC
◎ ATC có dạng chữ U ngược (U-shaped)
○ Bằng SMC tại điểm thấp nhất của ATC

8-18
 Short Run Cost Curve Relations

◎ SMC có dạng chữ U ngược (U-shaped)

○ AVC & ATC giao nhau tại điểm nhỏ nhất
○ Nằm dưới AVC & ATC khi AVC & ATC giảm
○ Nằm trên AVC & ATC khi AVC & ATC tăng

8-19
Mối quan hệ giữa chi phí ngắn hạn và hàm sản xuất

8-20
Mối quan hệ giữa chi phí ngắn hạn và hàm sản xuất

◎ Trong trường hợp chỉ có 1 loại yếu tố đầu vào, chi

phí ngắn hạn có mối quan hệ với hàm sản xuất
như sau:

8-21
Short-Run Production & Cost Relations

8-22
 Relations Between Short-Run Costs
& Production
◎ When marginal product (average product) is increasing,
marginal cost (average cost) is decreasing
◎ When marginal product (average product) is decreasing,
marginal cost (average variable cost) is increasing
◎ When marginal product = average product at maximum AP,
marginal cost = average variable cost at minimum AVC

8-23
 Summary of Short-Run Empirical
Production Functions
Short-run cubic
production equations
Total product

Average product of labor

Marginal product of labor

Diminishing marginal
returns
Restrictions on
parameters
10-2
 Summary of Short-Run Empirical
Cost Functions
Short-run cubic
cost equations
Total variable cost
Click to add text
Average variable cost

Marginal cost
Average variable cost
reaches minimum at
Restrictions on
parameters
10-2
 Sunk cost
A cost that is forever lost
after it has been paid.

26
 Fixed and Sunk Costs
Considering this illustration problem:
◎ ACME Coal paid $5,000 to lease a railcar from the Reading
Railroad. Under the terms of the lease, $1,000 of this payment is
refundable if the railcar is returned within two days of signing the
lease.
1. Upon signing the lease and paying $5,000, how large are ACMEʼs
fixed costs? Its sunk costs?
2. One day after signing the lease, ACME realizes that it has no use for
the railcar. A farmer has a bumper crop of corn and has offered to
sublease the railcar from ACME at a price of $4,500. Should ACME
accept the farmerʼs offer?
8-27
Exercise 1

8-28
Exercise 1

a. What are the estimated total, average, and marginal product

functions?
b. Are the parameters of the correct sign, and are they significant
at the 1 percent level?
c. At what level of labor usage is average product at its maximum?
Assume that the wage rate for labor (w) is $200.
d. What is output when average product is at its maximum?

8-29
Exercise 2

8-30
Exercise 2

a. Do the parameter estimates have the correct signs? Are they

statistically significant at the 5 percent level of significance?

b. b. At what level of output do you estimate average variable cost

reaches its minimum value?

c. What is the estimated marginal cost curve?

d. What is the estimated marginal cost when output is 700 units?

e. What is the estimated average variable cost curve?

f. What is the estimated average variable cost when output is 700 8-31
Typical Isoquants

9-32
2.
Production and Cost
in the Long Run

33
 Marginal Rate of Technical Substitution

◎ The MRTS is the slope of an isoquant & measures the

rate at which the two inputs can be substituted for one
another while maintaining a constant level of output

9-34
 Marginal Rate of Technical Substitution

◎ The MRTS can also be expressed as the ratio of two

marginal products:

9-35
 Isocost Curves

•
○ Represents amount of capital that may be purchased if zero labor is
purchased 9-36
Isocost Curves

9-37
Optimal Input Combination to Minimize
Cost for Given Output

9-38
 Optimal Combination of Inputs

◎ Minimize total cost of producing Q by choosing the input

combination on the isoquant for which Q is just tangent to
isocost curve
◎ Two slopes are equal in equilibrium
◎ Implies marginal product per dollar spent on last unit of
each input is the same

9-39
 DEMONSTRATION PROBLEM
Terryʼs Lawn Service rents five small push mowers and two
large riding mowers to cut the lawns of neighborhood
households. The marginal product of a small push mower is 3
lawns per day, and the marginal product of a large riding
mower is 6 lawns per day. The rental price of a small push
mower is $10 per day, whereas the rental price of a large riding
mower is $25 per day. Is Terryʼs Lawn Service utilizing small
push mowers and large riding mowers in a cost-minimizing
manner?

8-40
 Long-Run Costs

◎ Long-run total cost (LTC) for a given level of

output is given by:
LTC = wL* + rK*
◎ Where w & r are prices of labor & capital, respectively

9-41
 Long-Run Costs
◎ Long-run average cost (LAC) measures the cost per unit of
output when production can be adjusted so that the
optimal amount of each input is employed
○ LAC is U-shaped
○ Falling LAC indicates economies of scale
○ Rising LAC indicates diseconomies of scale

9-42
 Long-Run Costs
◎ Long-run marginal cost (LMC) measures the rate of
change in long-run total cost as output changes along
expansion path
○ LMC is U-shaped
○ LMC lies below LAC when LAC is falling
○ LMC lies above LAC when LAC is rising
○ LMC = LAC at the minimum value of LAC

9-43
Long-Run Average & Marginal Cost

9-44
 INSIDE BUSINESS
In industries with economies of scale, firms that produce greater levels of output produce at lower
average costs and thus gain a potential competitive advantage over rivals. Recently, two
international businesses pursued such strategies to enhance their bottom line.
Japanʼs Matsushita Plasma Display Panel Company, Ltd., invested $835 million to build the worldʼs
largest plant for producing plasma display panels. The factory—a joint venture between Panasonic
and Toray Industries—had the capacity to produce 250,000 panels per month by the late 2000s. This
strategy was implemented in response to rising global demand for plasma display panels, and a
desire on the part of the company to gain a competitive advantage over rivals in this increasingly
competitive industry.
An automaker in India—Maruti Udyog Ltd.—produced tangible evidence that economies of scale
are important in business decisions. It enjoyed a 271 percent increase in net profits in the
mid-2000s, thanks to its ability to exploit these economies. The increase was spawned by a 30
percent increase in sales volume that permitted the firm to spread its sizable fixed costs over
greater output. Importantly, the companyʼs reduction in average costs due to economies of scale
was more than enough to offset the higher costs stemming from increases in the price of steel.
SOURCES: “Matsushita Plans Big Expansion of PDP Manufacturing,” IDG News Service, May 19, 2004; “MUL Gains from Cost-Saving Measures,” Sify India, May 18,
2004.
45
 “
Part 2.
The organization of a firm

46
47
 OVERVIEW
I. Methods of Procuring Inputs
○ Spot Exchange
○ Contracts
○ Vertical Integration
II. Optimal Procurement Input
III. Principal-Agent Problem
○ Owners-Managers
○ Managers-Workers

48
 Learning objectives
1. Discuss the economic trade-offs associated with obtaining inputs
through spot exchange, contract, or vertical integration.
2. Identify four types of specialized investments, and explain how each can
lead to costly bargaining, underinvestment, and/or a “hold-up problem.”
3. Explain the optimal manner of procuring different types of inputs.

4. Describe the principal–agent problem as it relates to owners and

managers.
5. Discuss three forces that owners can use to discipline managers.

6. Describe the principal–agent problem as it relates to managers and 49

1.
METHODS OF
PROCURING INPUTS
1. Spot exchange
2. Contract
3. Vertical integration
50
 METHODS OF PROCURING INPUTS

Consider the manager of a car rental company. One input

needed to produce output (rental cars) is automobile
servicing (tune-ups, oil changes, lube jobs, and the like). The
manager has three options:
1. Simply take the cars to a firm that services automobiles
and pay the market price for the services
2. Sign a contract with a firm that services automobiles
3. Create within the firm a division that services
automobiles
51
 METHODS OF PROCURING INPUTS

◎ Spot exchange: An informal relationship between a

buyer and seller in which neither party is obligated to
adhere to specific terms for exchange.
◎ Contract: A formal relationship between a buyer and
seller that obligates the buyer and seller to exchange at
terms specified in a legal document.
◎ Vertical integration: A situation where a firm produces
the inputs required to make its final product.

52
 SPOT EXCHANGE (AT ARM’S LENGTH )
◎ Definition: An informal relationship between a buyer
and seller in which neither party is obligated to adhere
to specific terms for exchange.
○ Occurs when autonomous parties exchange goods or services
with no explicit or implicit agreement that the relationship will
continue into the future.
◎ Examples: Purchasing at Coop Mart, staying at New World
hotel for a night.
◎ Advantage: the firm gets to specialize in doing what it
does best

53
 CONTRACTS

◎ Definition: A contract is a legal agreement which defines the

conditions of an exchange or series of exchanges.
○ A formal relationship between a buyer and seller that obligates the buyer
and seller to exchange at terms specified in a legal document
◎ Examples: Bank loan, futures contract, marriage, etc.
◎ Advantage: purchase “nonstandard” inputs
◎ Disadvantage: costly to write; it takes time, and often legal fee,
extremely difficult to cover all the contingencies that could occur
in the future

54
 VERTICAL INTEGRATION (VI)
Definition: it is the situation where a firm shuns other
suppliers and chooses to produce an input internally.
◎ It alters control structures. Hidden information and hidden action
problems are reduced.
◎ Repeated interactions improve trust and coordination
◎ The integrated firm has a common set of goals.
◎ But remember the problems with making
Advantage: no longer has to rely on other firms
Disadvantage: loses the gains in specialization, has to
manage the production of inputs and final product
→bureaucratic costs associated with a larger organization. 55
 PRACTICE
Determine whether the following transactions involve spot
exchange, a contract, or vertical integration:
1. Clone 1 PC is legally obligated to purchase 300 computer chips each
year for the next three years from AMI. The price paid in the first year
is $200 per chip, and the price rises during the second and third
years by the same percentage by which the wholesale price index
rises during those years.
2. Clone 2 PC purchased 300 computer chips from a firm that ran an
advertisement in the back of a computer magazine.
3. Clone 3 PC manufactures its own motherboards and computer
chips for its personal computers.
56
 TRANSACTION COSTS

◎ Definition: Transactions costs are costs associated with

acquiring an input that are in excess of the amount paid to
the input supplier (Coase, 1937).
◎ Obvious examples: Insurance, freight, damage, own time.
◎ Other important examples: cost of searching for a supplier
willing to sell a specific input, negotiations costs incl.
opportunity cost of time, legal costs, costs of maintaining
assets required to engage in the transactions.

57
 TRANSACTION COSTS

◎ Many transaction costs are obvious.

○ Ex: input supplier charges a price of $10 per unit but
requires you to furnish your own trucks and drivers to
pick up the input → transaction costs : the cost of the
trucks and the personnel needed to “deliver” the input
to your plant.
◎ Some important transaction costs are less obvious →
distinguish b/w transaction costs : specific to a particular
trading or general in nature → specialized investment.

58
 SPECIALIZED INVESTMENT

◎ Definition: A specialized investment (SI) is an expenditure that is

made to allow two parties to make exchanges, but has less value in
alternative uses.
→ Examples: to ascertain the quality of chips, Apple spend $100 on a machine that tests the
chipsʼ quality:
○ If the machine is useful only for testing chips from TSM → SI.
○ If the machine can be resold at its purchase price or used to test the quality of
bolts produced by Intel Corp→ not a SI
→ Examples: Insuring assets (life or crops) when taking out a loan, building trust with a
supplier/customer, quality control investments required to access international markets
(food, toys, etc.).

◎ Definition: A relationship-specific exchange is one that occurs when

both parties to the exchange have made specialized investments.
59
These investments are called relationship-specific investments (RSIs).
 FORMS OF SPECIALIZED INVESTMENTS (SIs)

1. Site specificity
2. Physical asset specificity
3. Human asset
4. Dedication

60
 FORMS OF SPECIALIZED INVESTMENTS (SIs)

◎ Site specificity: Here, assets are situated side-by-side.

○ Examples: Coal mines and power plants, grain elevators and
rail-spurs, processes in steel or wine production

◎ Physical asset specificity: Here, the physical/

engineering/chemical properties of the asset are tailored
to a given set of transactions.
○ Examples: Dyes and molds, some genetically modified
organisms, software products

61
 FORMS OF SPECIALIZED INVESTMENTS (SIs)

◎ Human asset specificity: Here, the SI is human in nature.

○ Examples: Skill acquisitions, building trust
◎ Dedicated asset: is one that would be a complete
write-off if the transactions in question were cancelled.

There are other types of specificities, and some investments

may express multiple forms

62
 USEFULNESS OF SIs

◎ SIs generally promote economic efficiency (increase the

welfare of society) in that they identify collaborations
between firms that reduce the cost of producing the
same amount of goods or increase the amount of goods
produced by the same level of resources or do a bit of
both (supply/demand graphs).
◎ They are probably good for the firms in question because
the firms would likely not make the investment
otherwise.
◎ Problems may arise because SIs create vulnerability.
63
 IMPLICATION OF SI

◎ Specialized investments increase transaction costs

because they lead to
(1) costly bargaining: no other supplier capable of providing the
desired input at a momentʼs notice → no “market price” for the
input → bargaining process costly
(2) underinvestment: the level of the specialized investment often
is lower than the optimal level.
(3) opportunism: When a SI existed, buyer/seller attempt to
capitalize on the “sunk” nature of the investment by engaging in
opportunism

64
 IMPLICATION OF SI

(3) opportunism:
→ The “hold-up problem”: Once a firm makes a
specialized investment, the other party may attempt to
“rob” it of its investment by taking advantage of the
investmentʼs sunk nature.
→ This behavior make firms reluctant to engage in
relationship-specific investments in the first place
unless they can structure contracts to mitigate the
hold-up problem.

65
1.
OPTIMAL INPUT
PROCUREMENT
When to use each form of input
procurement?

66
 OPTIMAL INPUT PROCUREMENT

Spot exchange
Jiffyburger, a fast-food outlet, sells approximately 8,000 quarter-pound
hamburgers in a given week. To meet that demand, Jiffyburger needs
2,000 pounds of ground beef delivered to its premises every Monday
morning by 8:00 AM sharp.
1. As the manager of a Jiffyburger franchise, what problems would you
anticipate if you acquired ground beef using spot exchange?
2. As the manager of a firm that sells ground beef, what problems
would you anticipate if you were to supply meat to Jiffyburger
through spot exchange?

67
 SPOT EXCHANGE

◎ Used if there are no transaction costs and there are many

buyers and sellers in the input market
◎ Price is determined by the market price (intersection of
the supply and demand curves)
◎ Easily to change to suppliers that offer lower prices
◎ Disadvantages: result in high transaction costs due to
opportunism, bargaining costs, and underinvestment
when input requires substantial specialized investments

68
 CONTRACTS

◎ Overcome hold-up problem and the need to bargain over

price each time the input is to be purchased
◎ Can specify prices of the input before the parties make
specialized investments
◎ Reduces the incentive for either the buyer or the seller to
skimp on the specialized investments required for the
exchange
◎ How long should the contract last?

69
 CONTRACT LENGTH

◎ “Optimal” contract length: trade-off between the

marginal costs and marginal benefits of extending the
length of a contract.
◎ MC increases as contracts become longer
○ Contracts of long duration are more difficult to write because it
is harder to specify all contingencies, e.g., oil price rise, new
technology, etc; the less flexibility the firm has in choosing an
input supplier
◎ MB (avoided transaction costs of opportunism and
bargaining) vary with the length of the contract
○ For simplicity we can draw a flat MB curve
70
OPTIMAL CONTRACT LENGTH

71
SPECIALIZED INVESTMENTS AND CONTRACT LENGTH

72
SPECIALIZED INVESTMENTS AND CONTRACT LENGTH

73
SPECIALIZED INVESTMENTS AND CONTRACT LENGTH

74
 VERTICAL INTEGRATION

◎ Produce the input internally. Utilized when:

○ SIs generate transaction costs (due to opportunism, bargaining costs,
or underinvestment)
○ Product is extremely complex
○ The economic environment is plagued by uncertainty
◎ Advantage: mitigate transaction costs
◎ Disadvantages:
○ Managers must replace the discipline of the market with an internal
regulatory mechanism
○ The firm must bear the cost of setting up production facilities →firm no
longer specializes in doing what it does best
◎ VI should be undertaken only when spot exchange or contracts 75
 OPTIMAL INPUT PROCUREMENT
Depend on the extent to which there is
relationship-specific exchange.

76
 EXAMPLE: GENERAL MOTOR AND FISHER BODY

◎ Early 20th century: specialized investments

were relatively unimportant → GM bought
the bodies for its cars using spot exchange
◎ Closed metal bodies for car manufacturing
→ high degree of physical-asset specificity
→ GM and Fisher Body signed a 10-year
contract
◎ Parties to engage in opportunism → GM
vertically integrated by purchasing Fisher
Body

77
 METHODS OF PROCURING INPUTS

◎ Spot Exchange
○ When the buyer and seller of an input meet,
exchange, and then go their separate ways.
◎ Contracts
○ A legal document that creates an extended
relationship between a buyer and a seller
◎ Vertical Integration
○ When a firm shuns other suppliers and chooses to
produce an input internally

78
 KEY FEATURES

◎ Spot Exchange
○ Specialization, avoids contracting costs, avoids costs of vertical
integration.
○ Possible “hold-up problem.”
◎ Contracts
○ Specialization, reduces opportunism, avoids skimping on
specialized investments
○ Costly in complex environments
◎ Vertical Integration
○ Reduces opportunism, avoids contracting costs
○ Lost specialization and may increase organizational costs
79
 THE PRINCIPAL-AGENT PROBLEM

◎ Occurs when the principal cannot observe the effort of the agent.
○ Example: Shareholders (principal) cannot observe the effort of the
manager (agent).
◎ The Problem: Principal cannot determine whether a bad outcome
was the result of the agentʼs low effort or due to bad luck
◎ Managerʼs must recognize the existence of the principal-agent
problem and devise plans to align the interests of workers with that
of the firm
◎ Shareholders must create plans to align the interest of the manager
with those of the shareholders.

80
81
Manager receive 10 percent of profits

82
 SOLVING THE PROBLEM BETWEEN OWNERS AND
MANAGERS

◎ Internal incentives
○ Incentive contracts
○ Stock options, year-end bonuses
◎ External incentives
○ Personal reputation.
○ Potential for takeover.

83
 SOLVING THE PROBLEM BETWEEN WORKERS AND
MANAGERS

◎ Profit sharing: Mechanism used to enhance workersʼ efforts that

involves tying compensation to the underlying profitability of the
firm.
◎ Revenue sharing: Mechanism used to enhance workersʼ efforts that
involves linking compensation to the underlying revenues of the
firm.
◎ Piece rates: depend on the output produced
◎ Time clocks and spot checks

84
 CONCLUSION

◎ The optimal method for acquiring inputs

depends on the nature of the transactions costs
and specialized nature of the inputs being
procured.
◎ To overcome the principal-agent problem,
principals must devise plans to align the agentsʼ
interests with the principals.

85
Google Buys Motorola Mobility to Vertically Integrate In a bold move,
Google purchased Motorola Mobility—the recently spun-off cellular
arm of Motorola—for $12.5 billion. This move marks an attempt by
Google to vertically integrate into the smartphone hardware market.
Industry experts note that the purchase will allow Google to build
prototypes and advanced hardware devices that will help to point its
software business partners in the direction Google wants to go.
Google is banking on the increased coordination between its
software and Motorolaʼs hardware and the reduction in risks
associated with vertical integration outweighing the costs.
If you were a decision maker at Google, would you have
recommended vertical integration?

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