ajaz_eco_204_2012_2013_chapter_12_Long_Run_CMP

Then for simplicity this number reported

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Unformatted text preview: the value of capital in the beginning of the period. Then: () ( ) () } { } () For simplicity, this number reported to 4 decimal places. As a result there will be rounding errors calculations below { () [ { () () () } ]{ } () () { () } () () () { [ } { } ]{ } {} 20 ECO 204 Chapter 12: a Firm’s Cost Minimization Problem (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. () () () () [ { } ]{ } ( ){ } This yields (check these numbers using the equations above): Time 0 1 2 3 4 Period Period 1 Period 3 Value at time Depreciation over period ( Period 4 ) ( ( ) ( Period 2 ) ) Opportunity cost rate of return at time () () () () () (due to rounding errors) () Price of Owned Capital at time ( ( ( ( ( ) ) ) ) ) () () __________________________________________________________________________________________________ That was painful but necessary. No pain, no gain. Going forward, in any production period the firm knows the price of leased inputs (such as labor and capital), the price of purchased inputs that will be “consumed” in production (such as materials and power), and the price of owned capital used for production (taking into account salvage value and depreciatio...
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