ECON 2020- Final Exam Guide - Comprehensive Notes for the exam ( 194 pages long!)
28 Mar 2018
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Total revenue: the amount a firm receives from the sale of its output (price x quantity) Total cost: the market value of the inputs a firm uses in production. Explicit: require an outlay of money (ex. paying wages to workers) Something firm has to pay direct money for (cash) Accounting profit: total revenue total explicit costs: higher than economic profit because it does not take in to account the implicit costs. Economic profit: total revenue total costs (including explicit and implicit costs) Shows the relationship between the quantity inputs used to produce a good and the quantity of output of that good. Example: q = change in output, l = change in labor. The increase in total cost from producing one more unit. Farmer jack is rational and wants to maximize his profit. Fixed costs (fc): type of cost for which you have to pay that amount regardless of how much output you produce.
