ECON 1000 Lecture Notes - Lecture 7: Opportunity Cost, Sole Proprietorship, Oligopoly

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Ardeshir Noordeh

Document Summary

Accounting profit: profit = total revenue - total cost (explicit costs +depreciation) Economic profit: profit = total revenue - total cost (opportunity cost) * oc = explicit costs (paid with money) + implicit costs (opportunities forgone) * ~ amount spent on resources bought into the market is an opportunity cost of production because the firm could of bought different resources to produce some other good. ~ if the firm owns capital and uses it to produce its output, then the firm incurs an opportunity cost. The firm"s opportunity cost of using the capital it owns is called the implicit rental rate of capital. The implicit rental rate of capital is made up of . Major implicit costs are : economic depreciation is the change in the market value of capital over a given period , interest forgone is the return on the funds used to acquire the capital. The costs of owner"s resources is made up of .