ECON 208 Chapter Notes - Chapter 7: Root Mean Square, Opportunity Cost, Production Function
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ECON 208 Full Course Notes
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We are trying to understand the structure of the total cost in the short run. Financing of firms: a rms acquires funds from its owners in return for stocks, shares or equity(as they are variously called). Pro ts may be distributed as dividends: a rms creditors are lenders (not owners)- using debt instruments or bonds. Firms have the obligation to rely the principal and some interest to the lender. Goals of firms: firms are assumed to be proft-maximisers, each rm is assured to be a single, consistent, decision-making unit. Based on these assumptions, economist can predict the behaviour of rms in various situations. Response: duty of government to set rules, expression of consumers preference in the market place. Firms use four types of inputs for productions: Inputs provided directly by people, such as labour services. Inputs provided by the services of physical capital(machines)