ECON 1900 Study Guide - Division Of Labour, Natural Monopoly, Average Variable Cost
Document Summary
Chapter 6 topics: the business sector, economic costs, short-run production relationships, short-run production costs, long-run production costs. 2- firm: business organization that owns one or more plants. 3- industry: group of firms selling similar products. Legal forms of businesses: sole proprietorship, partnership, corporation advantages disadvantages. Corporation issues: corporations subject to double taxation, the principal-agent problem. The goals of the two groups may differ: principals are the stock holders, agents are the managers hired to run the corporation. Explicit costs: payments a firm must make. Implicit costs: opportunity costs of firm"s own resources, include normal profits. Total revenue ,000 cost of t-shirts ,000 clerk"s salary ,000 utilities $ 5,000 total (explicit) costs $ 63,000 accounting profit $ 57,000 ledger #2 economic profit = total. The short-run is a period of time in the production process during which at least one resource cannot be altered. (fixed plant: long run.
