ECON 1000 Lecture Notes - Lecture 4: Sunk Costs, Average Cost, Marginal Cost

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ECON 1000 Full Course Notes
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ECON 1000 Full Course Notes
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Lecture fourteen: making decisions in the short and long run. The firm makes man decisions to achieve its main objective: profit maximization. Some decisions are critical to the survival of the firm. Some decisions are irreversible or very costly to reverse. Other decisions are easily reversed and are less critical to the survival of the firm, but they still influence the profit. All decisions can be placed into two time frames. The short run is a time frame in which the quantity of one or more resources used in production is fixed. The time that it takes to change the quantity of the short run is considered to be the short run. For most firms, the capital, called the firms plant, is fixed in the short run. Other resources used by the firm (such as labour, raw materials an energy) can be changed in the short run.

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