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To: Carl R. who wrote (47168)	7/15/1999 11:46:00 AM
From: Estimated Prophet	Read Replies (1) \| Respond to of 53903

As my econ prof used to say "in the long run everything is variable." But marginal cost in economic terms is the total cost, including fixed plus variable, of producing the next unit. So Mr. leader probably should have referred to fixed vs. variable but I think his point is clear regardless.

To: Carl R. who wrote (47168)	7/15/1999 11:54:00 AM
From: Jeff Leader	Respond to of 53903

Carl - The reason that I wanted to change the terminology is that I was inferring from your posts that your definition of marginal cost included significantly more than variable cost components. Given your definition of marginal costs, why do you believe that producers would consider constraining production? Do you think ASPs are near variable cost per unit?

To: Carl R. who wrote (47168)	7/15/1999 12:16:00 PM
From: Skeeter Bug	Respond to of 53903

carl, marginal cost is typically the decision maker and it is the same as the variable cost of producing the next component. however, companies will produce below variable cost due to a fear they will slide down the learning (cost) curve. that is why you see inventory levels go up to 80 million units, as is the case with mu. they produce below variable, but don't want to sell below variable. this works until they need cash or technology takes a turn. then, la deluge. they just try and get what they can for the product.