10/6 Class

Question 1

price takers

Answer 1

firms are price takers

Question 2

sources of cost advantages

Answer 2

economies of scale
learning curve economies
differential low cost access to productive inputs
technological advances independent of scale
policy choices - deciding to be a low cost leader, product mix, policies on not giving boxes away

Question 3

advantages of volume

Answer 3

specialized machinery 
cost of plant and equipment
employee specialization
overhead
diseconomies can occur
other sources of diseconomies: worker motivation

Question 4

learning curve effect

Answer 4

first empirical test: aircraft costs declined 20% as cumulative volume doubled
learning curve effects in variety of functions: manufacturing, purchasing, service
BCG Market Share
Market share vs. economic performance
EOS vs learning curve