Chap 12

Chap 12 - Chapter12 the fi rm Productions and costs 12.1 1...

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Chapter12 the firm: Productions and costs 12.1 1. Explicit costs: The opportunity costs of productions that require a monetary payment; Implicit costs: The opportunity costs of productions that do not require a monetary payment; 2. Profit: The difference between total revenues and total cost; Accounting profits: Total revenues minus total explicit costs; Economic profits: Total revenues minus explicit and implicit costs; 3. Sunk costs: Cost that between incurred and cannot be covered; these costs are visible but should be ignored when making economic decisions; Sunk costs are irrelevant for any future action because they have already been incurred and cannot be recovered; 12.2 1. Short run: A period too brief for some production inputs to be varied; Long run: a period over which all production inputs are variable; 2. Production function: The relationship between the quantity of inputs and the quantity of outputs; Total product (TP): The total output of a good produced by the firm;
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Chap 12 - Chapter12 the fi rm Productions and costs 12.1 1...

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