Chapter 7 The production process

Chapter 7 The production process - Chapter 7 The production...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Production: the process by which inputs are combined, transformed, and turned into outputs Firm: an organization that comes into being when a person or group of people decides to produce a good or service to meet a perceived demand Profit: the difference between total revenue and total cost Total revenue: the amount received from the sale of the product (qxP) Total cost: the total of out of pocket cots and opportunity cost of all factors of production Normal rate of return: a rate of return on capital that is just sufficient to keep owners and investors satisfied. For relatively risk free firms, it should be nearly the same as the interest rate on risk-free government bonds Short run: the period of time for which two conditions hold: the firm is operating under a fixed scale of production and firms can neither enter no exit an industry Long run: the period of time for which there are no fixed factors of production: firms can increase
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/09/2012 for the course ECON 2106 taught by Professor Minjaesong during the Fall '06 term at Georgia Tech.

Ask a homework question - tutors are online