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Unformatted text preview: Economic profit =0 therefore accounting profit>0 2. Assemble the pattern indirectly Profit=TR –TC All we need is a pattern linking output and total cost. Trouble is, we don’t know what happens. We do know what happens to cost if one more hour of labor is used by one guy. If we can figure a pattern between labor usage and output, simple arithmetic will tell us the pattern between output and cost. There is a pattern (2x) depending on the frame. Short Run Long Run Unable to raise or lower Is able to raise or lower the size of the factory the size of the factory This means the existence If Q=0, he exited the industry Of fixed cost In the short run there is a definite pattern...
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.
- Spring '08