ECN 104 Lecture 8: ecn 104 chapter 8
3 Mar 2017
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The firm and the costs of production (ch. Refer to the payment that must be made to obtain and retain the services of a resource. There are two types of costs: explicit costs, monetary payments. Implicit costs: value of next best use, self-owned resources, includes normal profit. 24,000: accounting profit = revenue explicit costs, economic profit = accounting profit implicit costs, economic profit (to summarize)=total revenue economic costs. =total revenue explicit costs implicit costs. Economic profit is equal to total revenue less economic costs. Economic costs are the sum of explicit and implicit costs and include a normal profit to the entrepreneur. Accounting profit is equal to total revenue less accounting (explicit) costs. Short run and long run: short run - fixed plant, long run - variable plant. The production relationships reflect how labor and output are related in the short run. The total product is the total quantity that is produced.
