10.15 Chapter 13 - Econ 101 Introduction to Microeconomics...

Info icon This preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style Econ 101 Introduction to Microeconomics Professor Richard V. Burkhauser 13 The Costs of Production
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Econ 101 – Professor Burkhauser Key Concepts total revenue, p. 268 total cost, p. 268 profit, p. 268 explicit costs, p. 269 implicit costs, p. 269 economic profit, p. 270 accounting profit, p. 270 production function, p. 272 marginal product, p. 273 diminishing marginal product, p.273 fixed costs, p. 275 average total cost, p. 276 average fixed cost, p. 276 average variable cost, p. 276 marginal cost, p. 276 efficient scale, p. 278 economies of scale, p. 281 diseconomies of scale, p. 281 constant returns to scale, p. 281 increasing returns to scale, class decreasing returns to scale, class
Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Econ 101 – Professor Burkhauser Figure 13.1 Economist versus Accountant Reven ue To tal opportuni ty co sts How an Economist Views a Firm How an Accountant Views a Firm Reven ue Econo mic pr ofit Impli cit co sts Expli cit co sts Expli cit co sts Accounti ng pr ofit
Image of page 4
Econ 101 – Professor Burkhauser Question 13.1 Economic versus Accounting Costs Joe quits his $10,000 job as a pants presser and opens his own dry cleaning store. His financial report for the past year shows the following: Market value of the shop (beginning and end of the year) $50,000 Sales revenue of the shop $25,000 Operating expenses $5,000 If the market interest rate is 10%, an economist would say his profits were: a. $5,000 b. $10,000 c. $15,000 d. $20,000 e. $25,000
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Econ 101 – Professor Burkhauser Use this information to answer Question 13.2: Bill quits his $20,000 job as a cook and opens his own restaurant. His financial report for the past year shows the following: Market value of the shop $100,000 (beginning and end of the year) Sales revenue of the shop $ 40,000 Operating expenses $ 10,000
Image of page 6
Econ 101 – Professor Burkhauser Question 13.2: Economic versus Accounting Costs If the market rate of interest is 10 percent, an economist would say his profits were: a) $ 0 b) $10,000 c) $20,000 d) $30,000 e) $40,000
Image of page 7

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Econ 101 – Professor Burkhauser Question 13.3: Economic versus Accounting Costs Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. Due to the popularity of his local country western band, Farmer Tony has more students requesting lessons than he has time for, if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects the seeds he planted will yield $300 worth of wheat.
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern