Econ101October3

Econ101October3 - Econ 101 October 3 2007 For an individual...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Econ 101 October 3, 2007 For an individual firm, the supply curve is the marginal cost curve Choosing output where market price equals marginal cost maximizes profit If P > MC then the next unit makes a profit of P-MC (positive number) If P< MC then the next unit makes a loss of P-MC (negative number) When P=MC then profits are maximized Total Cost and Economics Profits o Total costs include fixed costs, variable costs (at market price) and the opportunity cost of owned factors (land owners time, land, business, and equipment) o Product Market Conditions Competitive Cannot control price Want to produce product until price = marginal cost Accounting profits are defined as total sales revenue minus operating costs o Does not subtract opportunity costs and owners time o Accounting profits = sales revenue sales cost o Economic profits = accounting profits opportunity costs ...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online