ECON 2100 Study Guide - Midterm Guide: Armoured Fighting Vehicle, Marginal Cost, Marginal Product

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Study how firms" decisions about prices and quantities depend on costs of prod. Total rev = amount firm receives for sale of output. Tot cost = market value of inputs firm uses in prod. Cost of prod: all opportunity costs of making output of goods/services. Explicit: input costs that require direct outlay of money by firm. Econ profit: measured by economists, tot rev - tot cost, including both explicit and implicit. Accounting profit: measured by accountants, firm tot rev - firm explicit costs. When tot rev > explicit and implicit costs, earn econ profit. Econ profit < accounting profit: b/c tot opportunity costs include implicit costs. Firm 20,000 explicit costs to prod output that is sold for tot rev of 30,000. Owner could have worked for other firm and earned 15,000 during this period. Accountant: firm profit = 30,000 - 20,000 = 10,000. Economist: not profitable, tot implicit and explicit = 20,000+15,000 = 35,000 which.

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