ECON 2009 Chapter Notes - Chapter 6: Sunk Costs, Fixed Cost, Variable Cost
Document Summary
Managers must know how are costs related to output. Considerations include both short run and long run. Opportunity cost doctrine the inputs" value (when used in their most productive way) together with production costs ( the accounting costs of producing a product) determine the economic cost of production. Historical cost the money that managers actually paid for an input. Explicit costs the ordinary items accountants include as the firm"s expenses. Implicit costs the forgone value of resources that managers did not put to their best use. Sunk costs are resources that are spent and cannot be recovered. Cost function showing various relationships between input costs and output rate. Short run the time span between one where the quantity of no input is variable and one where the quantities of all inputs are variable. Fixed inputs when the quantities of plant and equipment cannot be altered. Scale of plant this scale is determined by fixed inputs.