L3. Costs or Supply with questions

L3. Costs or Supply with questions - Costs/Supply n...

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Costs/Supply n Opportunity Cost q Value produced in the next best alternative q Scope wider than just the salary paid in the next best  alternative q Is the market price of inputs the true value of  opportunity cost? n Not true if a market does not exist for one or more of the  inputs
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Question on Cost n Utility A produces electricity using physical  capital, coal, and labor. It emits air pollution.  The  opportunity cost of production is A. The cost of coal and labor expended, that is the  variable cost accounted for. B. The total cost  on its balance sheets- capital, coal  and labor.  C. The cost of coal capital, coal, labor, and the  external cost of pollution.
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n Opportunity Cost q Inputs value in its next best alternative n Some have clear market values: example worker wages,  material costs etc n Some do not: owner hours, spouse hours on job etc. n
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L3. Costs or Supply with questions - Costs/Supply n...

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