<p>You wrote:</p>
<blockquote>
<p>It means <strong><em>per unit</em> cost</strong> of transating goods is independent of the
volume transacted.\ But in this equation <span class="math-container">$c$</span> is left so I wonder how
can we say that &quot;it is independent of the volume transacted&quot;.</p>
</blockquote>
<p>Therefore, it is the <em><strong>per unit</strong></em> cost that is independent of <span class="math-container">$c$</span>, not the <em><strong>total cost <span class="math-container">$\gamma(c,i)=cv(i)$</span></strong></em>, which of course depends on <span class="math-container">$c$</span>.</p>
<p>The <em>per unit cost</em> is:
<span class="math-container">$$\frac{\gamma(c,i)}{c}=v(i)$$</span></p>
<p>that is evidently independent of <span class="math-container">$c$</span>, as <span class="math-container">$v(i)$</span> is independent of <span class="math-container">$c$</span>.</p>

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2023-11-04T13:42:20.010Z
2023-11-04T13:42:20.010Z
BakerStreet
<p>Let's define the transaction cost of credit consumption as <span class="math-container">$\gamma(c,i)$</span> where <span class="math-container">$c$</span> is consumption and <span class="math-container">$i$</span> is a fraction of credit purchase.<br />
If the transaction technology does not exhibit economies of scale,<br />
it can be expressed with some function <span class="math-container">$v(\bullet)$</span> as: <span class="math-container">$\gamma(c,i)=cv(i)$</span><br />
It means per unit cost of transating goods is independent of the volume transacted.<br />
But in this equation <span class="math-container">$c$</span> is left so I wonder how can we say that &quot;it is independent of the volume transacted&quot;.</p>
<p>Can anyone tell me the reason?</p>

<macroeconomics><economies-of-scale>
Why $\gamma(c,i)=cv(i)$ means diseconomies of scale?
guest
# Why $\gamma(c,i)=cv(i)$ means diseconomies of scale?

(Asked by: username_0 on 2023-11-04)

Let's define the transaction cost of credit consumption as $\gamma(c,i)$ where $c$ is consumption and $i$ is a fraction of credit purchase.  
If the transaction technology does not exhibit economies of scale,  
it can be expressed with some function $v(\bullet)$ as: $\gamma(c,i)=cv(i)$  
It means per unit cost of transating goods is independent of the volume transacted.  
But in this equation $c$ is left so I wonder how can we say that "it is independent of the volume transacted".

Can anyone tell me the reason?

**Tags:** macroeconomics, economies-of-scale


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## 1 answers

### Answer by username_1 on 2023-11-04. Score: 2 | Accepted answer

You wrote:

> It means ***per unit* cost** of transating goods is independent of the
> volume transacted.\ But in this equation $c$ is left so I wonder how
> can we say that "it is independent of the volume transacted".

Therefore, it is the ***per unit*** cost that is independent of $c$, not the ***total cost $\gamma(c,i)=cv(i)$***, which of course depends on $c$.

The *per unit cost* is:
$$\frac{\gamma(c,i)}{c}=v(i)$$

that is evidently independent of $c$, as $v(i)$ is independent of $c$.


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