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University of Hail

University of Hail. Department of Computer Science & Software Engineering Software Engineering Economics (ECON 403). Mahdi H Miraz. Email: m.miraz@uoh.edu.sa Room: Portable-4, Room- 2 ECON403: Section 001 (Boys) Section 101 (Girls). Economic Models. Production Model Cost Model

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University of Hail

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  1. University of Hail Department of Computer Science & Software Engineering Software Engineering Economics (ECON 403)

  2. Mahdi H Miraz • Email: m.miraz@uoh.edu.sa • Room: Portable-4, Room- 2 • ECON403: • Section 001 (Boys) • Section 101 (Girls)

  3. Economic Models Production Model Cost Model Market Model

  4. PRODUCTION MODELS Production models study the forms of production systems and their efficiencies between the input and output. Productivity Marginal Product

  5. Productivity The productivity, or the average product, P̅, is a ratio between the total output O and the variable input or labor Iv, i.e.: P̅ = O/Iv

  6. Marginal Product The marginal product P̅∆ is a ratio between the incremental output and the incremental input, i.e.: P̅∆=ΔO/ΔIv

  7. Cost Models Costs of production systems can be classified as the fixed and variable costs. C = cf + cv

  8. Cost Models (Continued) • C̅= C/O (Cf+Cv)/O (Cf+Cv)/P*Iv • Marginal Cost, C̅Δ=ΔC/ΔO (Cf+ΔCv)/PΔ*ΔIv

  9. Economical Scale of Production

  10. Market Model The market is an economic domain in which buyers and sellers exchange commodity and services Classification: Perfect Competitive Monopolistically Competitive Oligopoly Monopoly

  11. Perfect Competitive Market A perfect competitive market is a free-entry market where many sellers supply identical products or services so that none of them may dominantly influence the market prices.

  12. Monopolistic Market A monopolistic market is a market where only a sole supplier provides a good or service without any close substitutes.

  13. Classification of Market (Cont) The markets may also be classified as surplus and shortage markets, which can be illustrated by the interactions of demands and supplies over time as shown in Figure on the next slide, where: a) A surplus market: ti’ < ti ⇒ S’(ti) > D(ti) b) A shortage market: ti’’ >ti⇒ S’’(ti)<D(ti)

  14. Classification of Market (Cont) Surplus Vs Shortage Markets

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