Econ100B Lecture3 - 4-08

Econ100B Lecture3 - 4-08 - Economics 100B Lecture 3 S...

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Economics 100B: Lecture 3 S. Nageeb Ali April 8, 2008
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Economics 100B: April 8, 2008 Handout on Chapter 6 ( ) 1 2 2 2 q L K = +
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Economics 100B: April 8, 2008
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Economics 100B: April 8, 2008
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Economics 100B: April 8, 2008
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Economics 100B: April 8, 2008 Chapter 7 General Outline square6 Chapter 6 examined efficient production square6 What a firm cares about is least costly production boxshadowdwn Efficiency is one-half of the picture boxshadowdwn Other half is picking inputs relative to their cost
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Economics 100B: April 8, 2008 Economic Costs Explicit Costs square6 Direct out-of-pocket payments for inputs square6 Wages, Salaries square6 Cost of capital, depreciation Opportunity Costs square6 Value of best alternative use of resource square6 If input is owned, opportunity cost can be measured by price at which input could be sold
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Economics 100B: April 8, 2008 Breakdown of Costs Total Cost = Fixed Cost + Variable Cost Fixed Cost square6 Cost of inputs whose use does not vary with output level boxshadowdwn Price of land, large machinery Variable Cost square6 Production expense that varies with output boxshadowdwn Cost of labor and materials Example : Taxicab service
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