# ECO 1104 Chapter Notes - Chapter 13: Fixed Cost, Marginal Cost, Variable Cost

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9 Dec 2016
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## Document Summary

Examining fir(cid:373)s(cid:859) behaviour in more detail to gain a better understanding of what decisions lie behind supply curve in a market. New u(cid:374)it of the (cid:272)ourse (cid:272)alled (cid:862)theory of the fir(cid:373)(cid:863) related to supply side of market. Definitions (cid:1842)(cid:1870)(cid:1867)(cid:1858)(cid:1872)(cid:1871) = (cid:1872)(cid:1867)(cid:1872)(cid:1853)(cid:1864) (cid:1870)(cid:1857)(cid:1874)(cid:1857)(cid:1866)(cid:1873)(cid:1857) (cid:1872)(cid:1867)(cid:1872)(cid:1853)(cid:1864) (cid:1855)(cid:1867)(cid:1871)(cid:1872)(cid:1871) (cid:1842)(cid:1870)(cid:1867)(cid:1858)(cid:1872)(cid:1871) = (cid:1842) (cid:1843) . Costs composed of payments to the factors of production. Explicit costs are out-of-pocket: ex. payroll, rent, capital costs, taxes, utilities. Implicit costs: opportunity costs associated w/ a fir(cid:373)(cid:859)s i(cid:374)puts that do not require an outlay of money. Fundamental notion from an economic point of view = not the size of the (cid:858)(cid:271)otto(cid:373) li(cid:374)e(cid:859), (cid:271)ut rather resource allocation. In other words, all choices are relative to some benchmark. If economic profits > 0, resources are being used such that the return exceeds that of other uses. If economic profits < 0, resources are being used such that the return is lower than that in other uses.