{"id":164,"date":"2017-02-01T23:49:47","date_gmt":"2017-02-02T04:49:47","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/?post_type=chapter&p=164"},"modified":"2017-05-15T20:09:58","modified_gmt":"2017-05-16T00:09:58","slug":"introduction-to-cost-and-industry-structure","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/chapter\/introduction-to-cost-and-industry-structure\/","title":{"raw":"Introduction to Cost and Industry Structure","rendered":"Introduction to Cost and Industry Structure"},"content":{"raw":"
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The Assembly Line - A Cost Revolution<\/h3>\r\nIn 1908, the automobile industry changed forever. The first automobiles date\u00a0back to the 15th century when Leonardo da Vinci was creating designs and models for transport vehicles. Karl Benz, a German inventor, developed the first gas-powered automobile in 1885 and the first American car manufacturer\u00a0opened in 1893. However, until 1908, the automobile was a luxury enjoyed only by the rich. It was not a technological innovation that changed the industry, but rather a revolution on costs.\r\n\r\nHenry Ford, an American car manufacturer, developed\u00a0a method that steadily reduced the cost of the automobile: the assembly line. Rather than having workers involved with each component of the manufacturing of a vehicle, workers specialized in certain areas.\u00a0This example illustrates the marginal product of labour<\/strong>, a concept we will explore in this section. We will see that the MPL will rise as you add more workers, as each new worker helps make the assembly line more efficient than before.\r\n\r\nThe Model T, known popularly as the \u201cTin Lizzie\u201d has become an American folkloric symbol,\u00a0as it was a turning point in allowing the majority of Americans to afford the automobile. By 1927, over 15 million Model-T\u2019s had been produced.\r\n\r\nThis innovation in production shows that the economics of the firm has an important bearing on the overall market and allows us to understand how costs affect supply.\r\n\r\n\"\"\r\n

Read more about the Model-T\u00a0<\/a><\/h3>\r\n<\/div>\r\n
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Topic\u00a0Objectives<\/h3>\r\nTopic 7:\u00a0Producer Theory<\/strong>\r\n\r\nIn this Topic, you will learn about:\r\n