ECON 142- Final Exam Guide - Comprehensive Notes for the exam ( 52 pages long!)
29 Mar 2018
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Production costs (chapter 11: production, definition: is the process of turning inputs into outputs, function: the relationship between the quantity of inputs a firm uses and the quantity of output it produces, fixed vs. It is the cost of the fixed input: vc: depends on the quantity of output produced. In that case, produce the largest quantity for which mr>mc: calculating profit, profit= tr-tc = tr-tc/q * q = p*q-tc/q*q = (p-tc/q) * q = (p- Atc) * q: (cid:862)b(cid:396)eak-eve(cid:374)(cid:863) p(cid:396)i(cid:272)e, market price at which a firm earns zero profit, recall we are using economic profit, which includes implicit costs. Cost of the good on the horizontal axis: increasing opportunity cost. 12: me(cid:454)i(cid:272)o"s opportunity cost: produce 2 computers, give up 12 shirts, divide by 2, 1 computer= 6 shirts, 1 shirt= 1/6 computer. 2 4 6 8 10 12 shirts: united states, 24 units of labor, 1 unit to produce each good, opportunity cost for each is 1.
