ECON 2001.01 Lecture Notes - Lecture 7: Fixed Cost, Making Money, Variable Cost
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8 May 2016
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Chapter 7- businesses and the cost of production. Economic costs: payment that must be made to retain and obtain the services of a resource. This is because resources cost money and they are scarce and have alternative uses. The income the firm must provide to resource suppliers to attract resources to them and away from the alternative uses. All resources have an opportunity cost, because they can be used for so many other things. Explicit costs: firm doesn"t own these, must buy them from others. Money payments a firm makes to those from who it gets resources from that they don"t already own. Ex: don"t have a table, so much get a table from other resources. Opportunity cost because it could have used that money that they spent on a table for other things like chocolate. Implicit costs: firm already owns these and uses them to make products.
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