Outline of Industrial Organization - Concepts

Concepts

Production side of Industry:

  • Production theory
    • production efficiency
    • factors of production
    • total, average, and marginal product curves
    • marginal productivity
    • isoquants & isocosts
    • the marginal rate of technical substitution
  • Production function
    • inputs
    • diminishing returns to inputs
    • the stages of production
    • shifts in a production function
  • Economic rent
    • classical factor rents
    • Paretian factor rents
  • Production possibility frontier
    • what products are possible given a set of resources
    • the trade-off between producing one product rather than another
    • the marginal rate of transformation

Cost side of Industry:

  • Cost theory
    • Different types of costs
      • opportunity cost
      • accounting cost or historical costs
      • transaction cost
      • sunk cost
      • marginal cost
    • The isocost line
  • Cost-of-production theory of value
  • Long-run cost and production functions
    • long-run average cost
    • long-run production function and efficiency
    • returns to scale and isoclines
    • minimum efficient scale
    • plant capacity
  • Economies of density
    • Economies of scale
      • the efficiency consequences of increasing or decreasing the level of production.
    • Economies of scope
      • the efficiency consequences of increasing or decreasing the number of different types of products produced, promoted, and distributed.
    • Network effect
      • the effect that one user of a good or service has on the value of that product to other people.
  • Optimum factor allocation
    • output elasticity of factor costs
    • marginal revenue product
    • marginal resource cost
  • Pricing and various aspects of the pricing decision
    • Transfer pricing
      • selling within a multi-divisional company
    • Joint product pricing
      • price setting when two products are linked
    • Price discrimination
      • different prices to different buyers
      • types of price discrimination
    • Yield management
    • Price skimming
      • price discrimination over time
    • Two part tariffs
      • charging a price composed of two parts, usually an initial fee and an ongoing fee
    • Price points
      • the effects of a non-linear demand curve on pricing
    • Cost-plus pricing
      • a markup is applied to a cost term in order to calculate price
      • cost-plus pricing with elasticity considerations
      • cost plus pricing is often used along with break even analysis
    • Rate of return pricing
      • calculate price based on the required rate of return on investment, or rate of return on sales
  • Profit maximization
    • determining the optimum price and quantity
    • the totals approach
    • marginal approach of production

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