ECON281 Lecture Notes - Lecture 21: Opportunity Cost, Marginal Cost, Sunk Costs

• School: University of Alberta
• Department: Economics
• Course: ECON281
• Professor: Lorne Priemaza

Document Summary

Explicit costs: costs that involve an exchange of money ie: rent, wages, licence, materials. Economists are interested in studying how firms make production & pricing decisions. Economic costs = explicit + implicit costs. Accountants are responsible for keeping track of the money that flows into and out of firms. Refer to these notes for our class" definitions. Implicit costs are the best alternative return of all of an agent"s input (time, money, etc). Alternately, an agent"s time could earn a wage elsewhere. (ie: work at simtech for. An agent"s money both isn"t used currently and can be used elsewhere. (ie: investing. ,000 @ 10% instead of using it to start a business gives an implicit cost of ) Buck opens his own bait shop in a store he owns, which cost ,000 per month to run, but he makes ,000 a month.