ECON 1050 Final: Final Exam Study Notes
12 Oct 2016
School
Department
Course
Professor
Document Summary
Economic profit = total revenue minus total cost (opportunity cost) A firm"s opportunity cost of production is the sum of the cost of using resources: bought in the market, owned by the firm, supplied by the firm"s owner. Accountants measure a firm"s profit to insure the firm pays the correct amount of income tax and to show its investors how their funds are being used. Economists measure a firms profit to enable them to predict the firm"s decisions with the goal of maximizing economic profit. 3 features of a firms environment limit the maximum economic profit it can make; Technological efficiency occurs when the firm produces a given output by using the least amount of inputs. Economic efficiency occurs when the firm produces a given output at the least cost. Technological efficiency does not imply economic efficiency, but economic efficiency implies technological efficiency.
