ECON 200 Lecture Notes - Lecture 31: Sunk Costs, Marginal Cost, Marginal Product
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ECON 200 Full Course Notes
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Econ 200 i lecture 31 cost of production. Opportunity cost: what you give up to get something: net benefit of the best/highest valued alternative forgone for a specific choice. Sunk cost: cost that has already been committed and can"t be recovered: bygone is bygone (if a cost is sunk, it is no longer an opportunity cost) Costs in accounting vs. costs in economics: explicit costs require an outlay of money. Implicit costs don"t require an outlay of money. Opportunity cost of your time: accountants focus on explicit costs, economists focus on both. Cost of production: all the opportunity costs of inputs used in production. Marginal cost: increase in total cost from an additional unit of production: measures the marginal willingness to sell. Increasing marginal cost occurs because of 2 reasons: inability to replication scarce resources. Producers have to use less suitable/lower quality resources.
