ECN 104 Chapter Notes - Chapter 8: Startup Company, Division Of Labour, Marginal Cost

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jadeserval343

3 Feb 2017

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Chapter 8 the firm and the cost of production. The payment that must be made to obtain and retain the services of a resource. Implicit costs: value of net best use, self-owned resources has a variable plant, includes normal profit (economic profit) Economic costs = explicit costs + implicit costs capacity. We refer to it as having a fixed plant. Accounting profit = revenue explicit costs. Economic profit = accounting profit implicit costs. Therefore economic profit = revenue explicit costs implicit costs. Short run the period of time too brief for a company to alter its plant. Long run a period of time long enough for a firm to adjust its plant capacity; Total product (tp) the total output of a particular good or service produced. Marginal product (mp) the extra output associated with adding a unit of. Average product (ap) output per unit of labour input = total product.

Related Questions

26. To the economist total cost includes

A. explicit and implicit costs.

B neither implicit nor explicit costs.

C. implicit, but not explicit, costs.

D. explicit, but not implicit, costs.

27. Accounting profits are typically

A. greater than economic profits because the former do not take explicit costs into account

B. equal to economic profits because accounting costs include all opportunity costs.

C. smaller than economic profits because the former do not take implicit costs into account.

D. greater than economic profits because the former do not take implicit costs into account.

28. Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were

A. $100,000 and its economic profits were $0.

B. $200,000 and its economic profits were $0.

C. $100,000 and its economic profits were $100,000.

D. $0 and its economic loss was $200,000.

29. The basic difference between the short run and the long run is that

A. all costs are fixed in the short run, but all costs are variable in the long run.

B. the law of diminishing returns applies in the long run but not in the short run.

C. at least one resource is fixed in the short run, while all resources are variable in the long run.

D. economies of scale may be present in the short run but not in the long run.

30. The law of diminishing returns indicates that

A. as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

B. because of economies and diseconomies of scale, a competitive firm's long-run average total cost curve will be U-shaped.

C. the demand for goods produced by purely competitive industries is downsloping.

D. beyond some point, the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.

sapphirecrow883

(a) List and explain the properties of indifference curves.[10 marks]

(b) Explain with the aid of a diagram the income and substitution effects and use the concepts to describe what happens when the price of a product decreases. [10 marks]

(a) Carefully explain what is meant by explicit; implicit; and sunk costs. How are they used to calculate accounting profit and economic profit? [5 marks]

(b) Explain the relationship between total product, marginal product, and average product. [5marks]

(d) Define economies and diseconomies of scale and explain why they occur.

rubyoyster381

Explain the concepts of explicit costs and implicit costs. Why do economists include implicit costs in their calculation of profits?
If monopolistically competitive firms have some control over the prices they charge, why do they experience zero economic profits in the long run? What does this mean for society as a whole in terms of costs to produce the product and resources allocation?
Explain why a firm maximizes its total profits by producing where MC = MR. To answer this question completely, you should explain why output levels greater than and less than the level where MC = MR do not maximize profits.

turquoiseduck880

ECN 104 Chapter Notes - Chapter 8: Startup Company, Division Of Labour, Marginal Cost

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