Lecture_9_for_students - Lecture 9 Click to edit Master...

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

View Full Document Right Arrow Icon
Click to edit Master subtitle style 1/1/11 Lecture 9 Costs
Background image of page 1

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

View Full DocumentRight Arrow Icon
1/1/11 Selection of a production process Technologically efficient The process that produces the desired level of Economically efficient The process that produces the desired
Background image of page 2
1/1/11 Economic cost Economic Costs=Explicit Costs + Opportunity Costs Explicit Costs
Background image of page 3

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

View Full DocumentRight Arrow Icon
1/1/11 Example Assume your have started your own firm Explicit costs=40,000 Opportunity cost=25,000 (your salary if you work somewhere else) Economic
Background image of page 4
1/1/11 Application: waiting for -Taxes pay for public health care in Britain and Canada. -Taxes do not cover for the costs of medical care -Providers ration health care. -Many patients suffer or can not work while waiting. -The average waiting time for a specialist to start cancer treatment in Britain is 62 days. -Are the costs of this waiting large? The economic costs to British employers due to working days lost is £1.5 billion .
Background image of page 5

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

View Full DocumentRight Arrow Icon
1/1/11 For producing q units of output, we need to use inputs. In the case of two inputs and one output that we discussed in lecture 8, inputs used for production are L and K. Price of L is PL=w and price of K is PK=r. Total cost of Short-Run cost measures
Background image of page 6
1/1/11 Short-Run cost measures Total Fixed cost (TFC): Total Variable Cost (TVC): It changes with output level TVC TFC TC + = Total cost
Background image of page 7

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

View Full DocumentRight Arrow Icon
Fixed costs and quasi-fixed costs Fixed costs: These costs are independent from output and firms have to pay for them either they have production or not (Example: paying for the lease of a building). Quasi-fixed costs:
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 34

Lecture_9_for_students - Lecture 9 Click to edit Master...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online