Class Notes (839,189)
Canada (511,223)
Economics (1,617)
ECON 1B03 (523)
Lecture

Econ 1B03 - Chapter 13 Part 1.docx

3 Pages
93 Views

Department
Economics
Course Code
ECON 1B03
Professor
Hannah Holmes

This preview shows page 1. Sign up to view the full 3 pages of the document.
Description
Richard Damra Monday, February 25, 2013 Econ 1B03 - Chapter 13 Cost of Production  The economic goal of every firm is to maximize its profit  Total Revenue, RV o The amount a firm receives for the sale of its output  Total Cost, TC o The market value of the inputs a firm uses in production  Profit, II, is the firm’s total revenue minus its total cost.  Profit = Total Revenue – Total Cost o II = TR – TC  A firm’s cost of production includes all opportunity costs of making its output of goods and services.  Explicit and Implicit Costs o A firm’s cost of production include explicit costs and implicit costs. o Explicit costs: Require a direct outlay of money (Can get a receipt). o Implicit costs: Don’t require a direct outlay of money (Money you could have made if you invested in ________ instead of upgrading the computer in your office).  Economists measure a firm’s economic profit as total revenue minus total cost, including both explicit and implicit costs, i.e, total opportunity costs  Accountants measure the accounting profit as the firm’s total revenue minus only the firm’s explicit cost  When total revenue exceeds both explicit and implicit costs, the firm earns economic proft  Economic profit is smaller than accounting profit because it includes implicit costs.  Richard Damra Monday, February 25, 2013 The Production Function  Production Function: Shows the relationship between quantity of inputs used to make a good and the quantity of output of that good. Jerry’s TV Inc.  Jerry’s TV assembles plasma televisions.  There is only one input to production – labour.  Jerry’s production function is given below.
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit