MGCR 293 Lecture Notes - Lecture 6: Average Variable Cost, Sunk Costs, Marginal Cost

• School: McGill University
• Department: Management Core
• Course: MGCR 293
• Professor: Kamal Salmasi

Document Summary

M an a ge r i al e c o n o m ics. Revenue manager could have received if he chose next best alternative. Opportunity cost doctrine: inputs values and production costs determine economic costs of production. Historical costs: this is not the same as opportunity costs. Implicit costs: forgone value of resources that managers did not put to best use (opportunity costs) Sunk costs: resources spent that cannot be recovered. Short run: consists of fixed and variable costs. A time period when the firm cannot alter the quantities of factories. Fixed costs: cost that does not depend on the firm"s level of output these costs are incurred even if the firm is producing nothing and cannot be recovered. Variable costs: cost that depends on the level of production chosen. Long run average cost function: shows the minimum long-run cost per unit of producing each output level. Each of these minimum costs represents a different short run.