ECO 07 - 3 NOV - Lecture 07 ECO 100Y5Y 3 November 2008 A....

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Lecture 07 3 November 2008 ECO 100Y5Y A. Cohen 1 E C O N O M I C S PARKIN BADE Lecture 7 3 November 2008 E C O N O M I C S PARKIN BADE Chapter 9 Organizing Production The Firm and Its Economic Problem Firm hires and organizes factors of production to produce and sell goods and services goal — profit maximization We will explain how firms allocate resources upward slope supply curve continued
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Lecture 07 3 November 2008 ECO 100Y5Y A. Cohen 2 Opportunity Cost and Economic Profit Accountants' costs and profits accounting costs = explicit costs + conventional depreciation accounting profits = revenues (explicit costs + conventional depreciation) continued Economists' costs and profits Opportunity costs of production = explicit costs + implicit costs explicit costs — paid in money implicit costs — opportunities forgone but not paid in money implicit rental rate – opportunity cost of using own capital cost of owner’s resources –
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ECO 07 - 3 NOV - Lecture 07 ECO 100Y5Y 3 November 2008 A....

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