Microeconomics Chapter 13 Class Notes

Microeconomics Chapter 13 Class Notes - C hapter 13- The...

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Unformatted text preview: C hapter 13- The Cost of P roduction I n t roduction: Our economy is made up of thousands of large fi rms that produce goods and services you enjoy every day. La rge Fi rms: General Motors: Automobiles General Electric: L ight Bulbs General Mi lls: Cereals These are th ree large fi rms which employee thousands of workers and have t housands of stock holders, who share in fi rms profits. Small Fi rms: Local Barber shop and Candy Shop are small and they employ only a few workers and owned by a single person or a family. Fi rms are willing to produce and sell a greater quantity of a good when the price of t he good is higher and Supply curve slope shifts upwards. Fi rms Decision about prices and quanti ties depend on the market condition they face. Fi rms cost are key determinant of their price and production for goods. The amount that the firm receives for the sale of its output (cookies) is called its total revenue. The amount that the fi rm pays to buy inputs (flour, sugar, workers, ovens, and so forth) is called its total cost. Revenue is Including the Cost, and Profit is excluding the cost. Profit=Total Revenue-Total Cost. Revenue =Quantity of Output x The price at which i t sells i ts output. Fi rms Total Cost: The cost of something is what you give up to get it: opportunity Cost. Explicit=Cash Money Impilicit= not necessary Cash. ...
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This note was uploaded on 04/17/2011 for the course ECON 2304 taught by Professor Majumder during the Spring '07 term at University of Houston.

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Microeconomics Chapter 13 Class Notes - C hapter 13- The...

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