Determinants of cost efficiency of the

These circumstances, together with expanding opportunities for trade, have enabled some countries to overcome in substantial degree the handicaps of a meagre agricultural endowment.

The Keynesian Theory of Investment (With Diagram and Example)

Marginal cost for the nth unit may be expressed as: A country's ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker. Money cost thus includes all the business expenses which involve outlay of money to support business operations. Suppose you have an opportunity to purchase an asset which costs Rs.

The spectrum of concurrent technologies that can be chosen is influenced by available innovations and adopter's compatibilities.


If capital can be steadily improved over time, its expansion need not entail diminishing returns. Accordingly, there is a drastic improvement in productivity and productive capacity utilization.

The formula of the MFP growth is as follows Schreyer ,7: Competitive pressure, financial status of the local authorities and various geo- and. The justification for this is that change in technological knowledge and the capital embodying it is both essential to substantial gains in productivity and the factor most immediately associated with those gains.

But an ultimate decline would be expected. Process improvements may include organizational structures e. They would, after a point, lead to diminishing increases and eventually even to a decline in output per worker.

A firm earns or makes Economic profit only when besides covering various costs of operation, a firm is also able to earn more than its opportunity cost or its possible earnings under the next best investment alternative.

Transit Contracting Reexamined: Determinants of Cost Efficiency and Resource Allocation

In consistent with the earlier findings, the results show that there is substantial inefficiency among the commercial banks in India over the period of the study to On the other hand, if the purchase price of capital C0 increases, investment will fall.

The income change created by production function is always distributed to the stakeholders as economic values within the review period. As the output of a firm changes the cost pattern of a firm also undergoes change.

There are different cost concepts.Average costs - equivalent to the average cost per unit; i.e., the total costs divided by the total number of units of production.


Fixed costs - those costs which, within a short time span, do not vary with the quantity of production; e.g., heating and lighting. According to the classical theory there are three determinants of business investment, viz., (i) cost, (ii) return and (iii) expectations.

According to Keynes investment decisions are taken by comparing the marginal efficiency of capital (MEC) or the yield with the real rate of interest (r). component of overall cost and revenue efficiency, scale efficiency, is an important determinant of prices and profit. (See also Berger, ; Goldberg and Rai, ).

engineering efficiency, requiring that goods be produced at lowest cost, while also requiring that the type and quantity of goods and services are consistent with society’s desires. important to determine the factors that affect bank cost efficiency level Kenya.

This research paper applies the Stochastic Frontier Analysis (SFA) model where the intermediation approach of determining bank efficiency is used. The intermediation approach is superior to the production approach as it is characterized by fewer data problems.

This study estimates the cost efficiency and its decompositions of Malaysian banks over the period of to by utilising data envelopment analysis (DEA) method. Instead of estimating efficiency based on DEA separate frontiers approach; this study departs from practice of many previous studies.

Determinants of cost efficiency of the
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