Chapter 13 Notes

Chapter 13 Notes - Chapter 13 Notes-review slides you slept...

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Chapter 13 Notes-review slides you slept through asshole Total cost-the market value of the inputs a firm uses in production Curve is positive slop and gets steeper as it goes b/c cost increases as a result of diminishing marginal product property Profit = Total revenue – total cost Cost of production-all opportunity cost of making its output of goods and services Explicit costs-input costs that require an outlay of money by the firm Implicit costs-input costs that do not require outlay of money by the firm Cost of capital can be considered an opportunity cost- ie it could be in a bank earning interest Economic profit= total revenue – (implicit and explicit costs) This is what motivates firms to supply goods and services Important for firm viability Accounting profit= total revenue – explicit costs Accounting profit generally larger b/c it fails to account for implicit costs Production function-relationship between the quantity of inputs and the quantity of outputs
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