scholarly journals Modelling of cost-functions under risk and uncertainty

2009 ◽  
Vol 57 (3) ◽  
pp. 13-20 ◽  
Author(s):  
Michaela Beranová ◽  
Dana Martinovičová
Keyword(s):  
Cost Function ◽  
Free Market ◽  
Probabilistic Approach ◽  
Cost Functions ◽  
Cost Curve ◽  
Risk And Uncertainty ◽  
Optimal Point ◽  
Bayesian Theorem ◽  
Long Run ◽  
Short Run

In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, these curves are used by the entities to find the optimal point of production, where they make the highest profits. There exist several different types of cost curves, while each of them is relevant to a different area of economics. In the article, authors are focused on solution of cost-functions modelling, both short-run cost function and long-run cost function under circumstances of risk and uncertainty. Considerations about factors of risk and uncertainty are based on an irrefutable fact that companies are not separate entities taken out of surrounding environment; entities operate in global world where many random factors are influencing the processes in companies while the number of these random factors is ad infinitum. The fact that estimation of cost functions' parameters are realized from past data is the basis of the considerations about planning of future scope of production based on these functions. Especially for the long-run cost functions it is impossible to leave out all the random influences. Their quantification is derived from aposteriori probabilistic approach according to Bayesian Theorem.

scholarly journals Application of the theory of decision making under risk and uncertainty at modelling of costs

2010 ◽  
Vol 56 (No. 5) ◽  
pp. 201-208 ◽  
Author(s):  
M. Beranová ◽  
D. Martinovičová
Keyword(s):  
Decision Making ◽  
Financial Accounting ◽  
Cost Functions ◽  
Risk And Uncertainty ◽  
Managerial Decision ◽  
Managerial Decision Making ◽  
Bayesian Theorem ◽  
Long Run ◽  
Short Run ◽  
The Cost

The costs functions are mentioned mostly in the relation to the Break-even Analysis where they are presented in the linear form. But there exist several different types and forms of cost functions. Fist of all, it is necessary to distinguish between the short-run and long-run cost function that are both very important tools of the managerial decision making even if each one is used on a different level of management. Also several methods of estimation of the cost function's parameters are elaborated in the literature. But all these methods are based on the past data taken from the financial accounting while the financial accounting is not able to separate the fixed and variable costs and it is also strongly adjusted to taxation in the many companies. As a tool of the managerial decision making support, the cost functions should provide a vision to the future where many factors of risk and uncertainty influence economic results. Consequently, these random factors should be considered in the construction of cost functions, especially in the long-run. In order to quantify the influences of these risks and uncertainties, the authors submit the application of the Bayesian Theorem.

scholarly journals Different Variations of Cost Curve in Economics

2019 ◽  
Vol 2 (2) ◽  
pp. 19-28
Author(s):  
Hartini Ab Ghani
Keyword(s):  
Market Economy ◽  
Free Market ◽  
Unit Cost ◽  
Variable Cost ◽  
Cost Curve ◽  
Free Market Economy ◽  
Total Cost ◽  
Long Run ◽  
Cost Curves ◽  
Short Run

In economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve; and profit maximizing firms use cost curves to decide output quantities. There are various types of cost curves, all related to each other, including total and average cost curves; marginal ("for each additional unit") cost curves, which are equal to the differential of the total cost curves; and variable cost curves. Some are applicable to the short run, others to the long run.

scholarly journals ESTIMATING PROFIT , COST FUNCTION AND TECHNICAL EFFICIENCIES OF RICE PRODUCTION IN NEJAF FOR SEASON 2016*

2019 ◽  
Vol 50 (5) ◽  
Author(s):  
Al-Mashhdani & Mahmood
Keyword(s):  
Cost Function ◽  
Output Level ◽  
Average Output ◽  
Optimal Output ◽  
Long Run ◽  
Actual Output ◽  
Short Run ◽  
Profit Maximizing ◽  
Economic Price ◽  
The Cost

The aim of this study was to estimate the profit and cost functions as well as economic, price, cost, and technical efficiencies beside the other economic indices at actual, optimal and profit-maximizing output of rice. A random sample of 240 rice  farms in Nejaf province was used during the agricultural season 2016. From efficiency scales of profit function, it was shown that the output quantity had the greatest impact on the profit compared to other variables (average output costs and price). According to the cost function, the optimum output level and the profit- maximizing output  level for the short run were 64.84 tons and 117.4 tons respectively. The lowest price that the farmer can accept was 194.83 thousand dinars / ton. At this price, the producer loss all fixed costs in the short run, hoping that the price of rice will improve in the long run. Net profit was estimated on the basis of actual output, cost minimizing output (optimal) and profit-maximizing output, which amounted to 8084.32, 30852.65 and 45547.5 thousand dinars, respectively. The of technical efficiency were 34%. and the cost efficiency was 0.52. We conclude from the study that economic resources have not been exploited optimally, indicating that actual output is far from optimal output. The study recommends a output policy aimed at increasing economic efficiency and optimizing the use of available resources.

scholarly journals Dynamic Adjustment of U.S. Agriculture to Energy Price Changes

2010 ◽  
Vol 42 (2) ◽  
pp. 289-301 ◽  
Author(s):  
David K. Lambert ◽  
Jian Gong
Keyword(s):  
Cost Function ◽  
Energy Price ◽  
Energy Prices ◽  
Input Price ◽  
Dynamic Adjustment ◽  
Agricultural Producers ◽  
Price Changes ◽  
Long Run ◽  
Short Run ◽  
Over Time

Energy prices increased significantly following the first energy price shock of 1973. Agricultural producers found few short run substitution possibilities as relative factor prices changed. Inelastic demands resulted in total expenditures on energy inputs that have closely followed energy price changes over time. A dynamic cost function model is estimated to derive short and long run adjustments within U.S. agriculture between 1948 and 2002 to changes in relative input prices. The objective is to measure the degree of farm responsiveness to energy price changes and if this responsiveness has changed over time. Findings support inelastic demands for all farm inputs. Statistical results support moderate increases in responses to energy and other input price changes in the 1980s. However, demands for all inputs remain inelastic in both the short and long run. Estimation of share equations associated with a dynamic cost function indicates that factor adjustment to input price changes are essentially complete within 1 year.

Economic Consequences of Recycling for the Canadian Newsprint Industry

1974 ◽  
Vol 4 (1) ◽  
pp. 15-22
Author(s):  
Thomas L. Tucker
Keyword(s):  
United States ◽  
The United States ◽  
Economic Consequences ◽  
Cost Curve ◽  
Eastern Canada ◽  
Real Cost ◽  
Long Run ◽  
Recycled Fiber ◽  
Short Run ◽  
The Right

The probable future structure of the Canadian newsprint industry is outlined and the likely economic consequences to Canadian newsprint producers of the increased consumption of newsprint made within the United States from recycled fiber is demonstrated. The overmature nature of the Canadian newsprint industry is shown. Old mills and plant capital, stabilized markets, asset fixity, and real cost increases are given as major short-run structural weaknesses, especially for eastern Canadian mills, which make the industry susceptible to marginal market shifts such as competition from recycled newsprint paper.Densely populated areas adjacent to eastern Canada are shown to attract not only the output from Ontario, Quebec, and the Maritimes but also the secondary fiber newsprint mills. Such an intrusion in the market, while marginal in effect, only magnifies the structural weaknesses of a mature industry.Two factors much more critical to the structure of the Canadian newsprint industry appear to be the probable movement up and to the right along the industry's long-run cost curve (real cost increases) and mill capacity increases within the United States. Changes in these two factors should overshadow the influence of recycling at least through 1985.

Migration and US agricultural competitiveness

2013 ◽  
Vol 10 (2) ◽  
pp. 159-179 ◽  
Author(s):  
Philip L. Martin
Keyword(s):  
Farm Workers ◽  
Easy Access ◽  
Foreign Born ◽  
Guest Workers ◽  
Long Run ◽  
Short Run ◽  
Lower Wage ◽  
The Government ◽  
The One

Agriculture has one of the highest shares of foreign-born and unauthorized workers among US industries; over three-fourths of hired farm workers were born abroad, usually in Mexico, and over half of all farm workers are unauthorized. Farm employers are among the few to openly acknowledge their dependence on migrant and unauthorized workers, and they oppose efforts to reduce unauthorized migration unless the government legalizes currently illegal farm workers or provides easy access to legal guest workers. The effects of migrants on agricultural competitiveness are mixed. On the one hand, wages held down by migrants keep labour-intensive commodities competitive in the short run, but the fact that most labour-intensive commodities are shipped long distances means that long-run US competitiveness may be eroded as US farmers have fewer incentives to develop labour-saving and productivity-improving methods of farming and production in lower-wage countries expands.

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

Impact of exchange rate and oil price on the yield of sovereign bond and sukuk: Evidence from Malaysian capital market

2017 ◽  
Vol 5 (4) ◽  
pp. 27
Author(s):  
Huda Arshad ◽  
Ruhaini Muda ◽  
Ismah Osman
Keyword(s):  
Exchange Rate ◽  
Capital Market ◽  
Time Series Data ◽  
Oil Prices ◽  
Oil Price ◽  
Series Data ◽  
Sovereign Bond ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study analyses the impact of exchange rate and oil prices on the yield of sovereign bond and sukuk for Malaysian capital market. This study aims to ascertain the effect of weakening Malaysian Ringgit and declining of crude oil price on the fixed income investors in the emerging capital market. This study utilises daily time series data of Malaysian exchange rate, oil price and the yield of Malaysian sovereign bond and sukuk from year 2006 until 2015. The findings show that the weakening of exchange rate and oil prices contribute different impacts in the short and long run. In the short run, the exchange rate and oil prices does not have a direct relation with the yield of sovereign bond and sukuk. However, in the long run, the result reveals that there is a significant relationship between exchange rate and oil prices on the yield of sovereign bond and sukuk. It is evident that only a unidirectional causality relation is present between exchange rate and oil price towards selected yield of Malaysian sovereign bond and sukuk. This study provides numerical and empirical insights on issues relating to capital market that supports public authorities and private institutions on their decision and policymaking process.

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