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9-7-10 - Accounting Costs Explicit(obvious Economic Costs...

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Lecture Day 5 Tuesday, September 07, 2010 11:04 AM Sellers Objective: Maximize Profit In order to sell: MR > MC Long term and Short term Production Considerations Short Run - at least one input is fixed No matter production, a specific input will not change Ex: Building, Amt. of machines, etc. Long Run - all inputs and technology are assumed to be variable Short Run - firms do not enter the market Long Run - firms are free to enter the market as long as barriers don't exist
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Unformatted text preview: Accounting Costs: Explicit (obvious) Economic Costs: Opportunity Costs = Explicit + Implicit Supply Curve: How much the producers are willing and able to provide at various prices, all else equal Higher Price means more quantity produced because the marginal cost will be lower than the marginal revenue for longer Change in supply - Supply curve shifts Increase in Supply...
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