MGEB02H3 Chapter Notes - Chapter 7: Sunk Costs, Isocost, Capital Expenditure

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whiteserval957

29 Oct 2011

School

UTSC

Department

Economics for Management Studies

Course

MGEB02H3

Professor

A.Mazaheri

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Document Summary

Economic cost versus accounting cost: accounting cost actual expenses plus depreciation charges for capital equipment, economic cost cost to be a firm utilizing economic resources in production, including opportunity cost. Opportunity cost: opportunity cost cost associated with opportunities that are forgone when a firm"s resources are not put to their best alternative use. Marginal cost (mc: marginal cost increase in cost resulting from the production of one extra unit of output, mc = vc/ q = tc/ q. The determinants of short-run cost: fixed wage, w, mc = vc/ q. Mc = w/mpl: high mp means that labour requirement is low, as is the marginal cost - mp and mc run parallel. Diminishing marginal returns and marginal cost: mpl declines as the quantity of labour employed increases, mc will increase as output increases. The shapes of the cost curve: fixed cost = distance between tc curve and vc curve curve, mc crosses avc and atc at their min points.

Related Questions

Economic costs of production differ from accounting costs in that:

A) economic costs include expenditures for hired resources while accounting costs do not.
B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
C) accounting costs include expenditures for hired resources while economic costs do not.
D) accounting costs are always larger than economic cost.

turquoisesalmon794

Economic costs of production differ from accounting costs in that
A) economic costs include expenditures for hired resources while accounting costs do not.
B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
C) accounting costs include expenditures for hired resources while economic costs do not.
D) accounting costs are always larger than economic cost.