ECO 1104 Chapter Notes - Chapter 13: Marginal Cost, Marginal Product, Lemonade
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22 Nov 2016
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ECO 1104 Full Course Notes
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Industrial organization: the study of how firms decisions regarding prices and quantities depend on the market conditions they face. Total revenue: the amount a firm receives for the sale of its output. Total cost: the market value of inputs a firm uses in production. Explicit costs: input costs that require an outlay of money by the firm. Ex. buying raw materials and paying wages. Implicit costs: input costs that do not require an outlay of money by the firm. Cost of financial capital that has been invested (ie. the money spent on the business cannot be sitting in savings earning interest) Economic profit: firm"s total revenue - all opportunity costs (explicit and implicit) of producing the goods and services sold. Accounting profit: firm"s total revenue - explicit costs. Production function: the relationship between the quantity of inputs used to make a good and the quantity of output of that good.