ECON-101 Lecture Notes - Lecture 13: Average Cost, Average Variable Cost, Marginal Cost
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5 Mar 2016
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Examine what items are included in a firm"s costs of production. Analyze the link between a firm"s production process and its total costs. Learn the meaning of average total cost and marginal cost and how they are related. Consider the shape of a typical firm"s cost curves. Examine the relationship between short-run and long-run costs. Firms: an organization the hires l. r in order to produce a good/service: if the entrepreneur succeeds, he/she makes profit, objective of firms: to maximize profit. Economists & accountants disagree on definition of profit . Economic profit: total revenue minus cost, including both explicit and implicit cost: = total revenue opportunity cost, **economic profit will always be lower than accountant profit. Accounting profit: total revenue minus total explicit cost: explicit cost: input that require an outlay of money by the firm (direct payments, implicit cost: input costs that do not require an outlay of money by firms.
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