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Lecture 4_with ink - Economics 100B: Lecture 4 Chapter 7...

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Economics 100B: Lecture 4
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Chapter 7 Administrative: Discussion Section tonight; no discussion section on Monday. General Outline s Chapter 6 examined efficient production s What a firm cares about is least costly production b Efficiency is one-half of the picture b Other half is picking inputs relative to their cost
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Economic Costs Explicit Costs s Direct out-of-pocket payments for inputs s Wages, Salaries s Cost of capital, depreciation Opportunity Costs s Value of best alternative use of resource s If input is owned, opportunity cost can be measured by price at which input could be sold
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Breakdown of Costs Total Cost = Fixed Cost + Variable Cost Fixed Cost s Cost of inputs whose use does not vary with output level b Price of land, large machinery Variable Cost s Production expense that varies with output b Cost of labor and materials
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Variable and Fixed Costs at JetBlue s JetBlue: New planes, leather seats, live satellite TV b Bring “humanity back to air travel”; instead of packing them like sardines. Costs
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This note was uploaded on 01/20/2010 for the course ECON 100 taught by Professor Hnewhous during the Spring '08 term at UCSD.

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Lecture 4_with ink - Economics 100B: Lecture 4 Chapter 7...

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