ch7_revised pg 8 - Chapter 7 Producers in the short-run...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 7 – Producers in the short-run Economic Profits Production o Exercise 7.1 : Production Table Short-run costs o Exercise 7.2 : Cost Table Productivity and cost curves o Exercise 7.3 : Productivity and Cost curves Economic Profits Accounting profit = Revenues - accounting costs. Economic profit = Revenues - opportunity costs. Opportunity costs include accounting costs plus… …foregone salary …foregone interest (pure return + risk premium) …foregone rent (owned buildings, special assets) Zero economic profits implies that… …a firm is doing just as well as their next best alternative. …firms will neither enter nor exit. …accounting profits will equal _______________. Positive economic profits implies that… …a firm is doing better than its next best alternative. …firms will enter …accounting profits are _____________________. Negative economic profits implies that… …a firm is doing worse than its next best alternative …firms will exit Maria Gallego EC120 - Chapter 7 Ranagand Lipsey – Producers in the short-run page 1 of 10
Background image of page 1

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

View Full DocumentRight Arrow Icon
…accounting profits are ______________________. Production Production function indicates the highest output or total product (Q) that can be produced for given levels of capital (K) & labour (L) inputs …is expressed mathematically as ) L , K ( f Q = Average product
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/17/2012 for the course ECONOMICS 120 taught by Professor Mesta during the Fall '10 term at Wilfred Laurier University .

Page1 / 10

ch7_revised pg 8 - Chapter 7 Producers in the short-run...

This preview shows document pages 1 - 3. Sign up to view the full document.

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