Econ 105 the cost of production notes
Because economic profit includes both explicit and implicit costs ....
- accounting profit is larger than economic profit
Explicit costs are ...
- costs that include just about everything we typically think of as a cost - costs that require a firm to spend money
The marginal cost is the (blank) cost that will be incurred by producing one additional unit of (blank)
1. Additional 2. Output
When the (blank) product crosses the (blank) product curve the average product curve starts to decrease
1. Marginal 2. average
Blank)profit is total revenue minus explicit costs
Accounting profit
Suppose jump high produces trampolines ina tented apacebusing purchased frames and materials. They also hire laborer and buy advertising services from a marketing company for a flat annual fee
Advertising and rent
.... product of labor is the units of output produced per worker
Average product
If a small firm finds that operating on a larger scale causes its average cost to stay the same the firm is facing ...
Constant returns to scale
Variable costs ...
Depend on the quantity of output produced
If a small firm finds that operating in a larger scale causes its average cost to increase, the firm is facing
Diseconomies of scale
Blank is the total revenue minus all opportunity costs
Economic profit
In general which is smaller than the other economic or accounting
Economic profit is smaller than accounting profit
Firms have both explicit and implicit costs. Accounting profit is total revenue minus
Explicit costs
Rent on a building, employee salaries, materials and machines are examples of ....
Explicit costs
Explicit costs include
Fixed and variable costs
Costs that don't change as output increases or decreases are called
Fixed costs
If you use your saved money as your start up capital there is an implicit cost because you.....
Give up interest you could have earned on the money in a savings account
......... costs represent forgone aopportunieties
Implicit
The slope of the total cost curve (blank) because of the principle of diminishing marginal product
Increases
Suppose drink well produces flavored water in a permantly rented space using their private well purchased bottles and hired hourly labor. They buy advertising services from a marketing company for the flat annual feel, there variable costs include :
Labor, water, and bottles
One cost faced by nearly all firms is the (blank) cost of the money invested in starting up the business
Opportunity
When economists think about a firms costs they are thinkin about
Opportunity costs
Economic profit is total revenue minus all explicit and ....... costs
Opportunty costs
Economists assume that a firms objective is to maximize
Profits
The amount that a firm receives from the sale of good ma and service is the total
REVENUE
Marginal product is represented by the (blank) of the total production curve
Slope
A firms total cost is the
Sum of all of its fixed and variable costs
A firms first few employees tend to have increasing marginal product, at some point, the principle of diminishing marginal products kicks in, as a result
The average total cost curve is U-Shapdd
A period in which all inputs can be changed is called
The long run
Economists think of the ( blank) run as being the period of time in which a firm can vary all of its cost.
The long run
Average total cost = (blank) cost/ quantity of output
Total cost
Average variable costs = ...... cost/quantity of output
Variable