ECON 1000 Chapter 11: Output and Costs
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ECON 1000 Full Course Notes
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Reading 4 - chapter 11 - output and costs. People operating firms have to make many decisions; aimed at achieving maximum profit. Some decisions are big ones; some are irreversible. If decision was incorrect, it might lead to failure of the firm. Other decisions are small; can be easily changes. If incorrect, the firm can change its actions and survive. Biggest decision that an entrepreneur makes is what industry to establish a firm. Decisions about quantity to produce and the price to charge depend on the type of market in which the firm operates. Two decision time frames help study relationship between firm"s output decision and its costs: The short run is a time frame in which the quantity of at least one factor of production is fixed. For most firms: capital, land, and entrepreneurship are fixed factors of production and labour is the variable factor of production.
