ECON101 Lecture Notes - Lecture 12: Average Cost, Marginal Cost, Marginal Product

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: J.Scott Beesley

Document Summary

Costs as opportunity costs: explicit costs input costs that require an outlay of money by the firm. Implicit costs input costs that do not require an outlay of money by the firm. Economic profit versus accounting profit: economic profit = total revenue minus total cost, including both explicit and implicit costs, accounting profit = total revenue minus total explicit cost. From the production function to the total-cost curve: a total-cost curve shows the relationship between the quantity of output produced and total cost of production. Fixed and variable costs: fixed costs costs that do not vary with the quantity of output produced, variable costs costs that do vary with the quantity of output produced. Clinton richardson: a firm"s total cost is the sum of fixed and variable costs. Whenever marginal cost is greater than average total cost, average total cost is rising.