BUSS1040 Lecture Notes - Lecture 2: Ceteris Paribus, Average Variable Cost, Market Price

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1040
• Professor: All

Document Summary

Lecture 2 - firm behaviour: production, costs and supply. Firms aim to max. profits (e. g. local community for charities) -> profit = economic profit. Important to keep business running and existing, corporate social responsibility: accounting profit = revenues - all explicit costs (direct payments/expenditures, won"t consider implicit opportunity costs, economic profit = revenues - total opportunity cost. Implicit costs (value of forgone opportunities), e. g. forgone wages, interest earnings. Zero economic profit - revenue just covers opportunity costs. Input is "fixed" - cannot be changed regardless of output produced: differ b/w industries. Short run - period of time during which at least 1 factor of production is fixed: e. g. size of factory. Long run - all factors of production are variable (not fixed: e. g. free to decide whether renewing lease for a factory when it ends. Marginal product (mp: change in output when 1 more unit of input is used.