ECON 101 2Midtermreview

Product curves product curves are graphs of the three

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Unformatted text preview: rm’s opportunity cost of production is the sum of the cost of using resources Bought in the market Owned by the firm Supplied by the firm's owner Resources Bought in the Market The amount spent by a firm on resources bought in the market is an opportunity cost of production because the firm could have bought different resources to produce some other good or service. The implicit rental rate of capital is made up of 1. Economic depreciation 2. Interest forgone Economic depreciation is the change in the market value of capital over a given period. Interest forgone is the return on the funds used to acquire the capital. Resources Supplied by the Firm’s Owner The owner might supply both entrepreneurship and labour. The return to entrepreneurship is profit. The profit that an entrepreneur can expect to rec...
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