Economics 1021A/B Study Guide - Midterm Guide: Canada Revenue Agency, Root Mean Square, Opportunity Cost
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10 Apr 2015
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ECON 1021A/B Full Course Notes
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Firm: institution that hires factors of production and organizes those factors to produce and sell goods and services. A rms goal: is to maximize pro ts. A rm that does not seek to maximize pro t either fails or is taken over by a rm that does seek that goal. Accounting pro t: total money made - total expenditure = cash surplus. Cash surplus - building depreciation (other econ factors) = pro t. Depreciation: the fall in value of a rm"s capital. To calculate depreciation accountants use revenue canada rules. Economic accounting: accountants measure a rm"s pro t to ensure that the rm pays the correct income taxes. Economic pro t: total revenue - total cost (with total cost measured as the opportunity. A firm"s opportunity cost of production: the value of the best alternative use of the resources that a rm uses in production. Opportunity cost: the highest values alternative forgone.
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