ECON 10223 Lecture 11: Long Run Costs & output decisions

QUESTIONS

1. Explain the difference between operating decisions and planning decisions

2. Explain the following costs and observe the difference between each one.

1. Historical costs

2. Current costs

3. Replacement cost

4. Opportunity Cost

5. Explicit cost

6. Implicit cost

7. Incremental cost

8. Sunk cost

7. Short-run and long-run cost

A distinguishing feature of an oligopolistic industry is the tension between

a.profit maximization and cost minimization.

b.cooperation and self-interest.

c.producing a small amount of output and charging a price above marginal cost.

d.short-run decisions and long-run decision

Describe the Behavior of the profit-maximizing firm. How does the firm account for costs? Define and explain the two types of costs associated with production? How do decisions change from the short-run to the long-run?