EC120 Chapter Notes - Chapter 13: Longrun, Lemonade, Average Cost
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EC120 Full Course Notes
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Helen started her cookie business to make money. Economists normally assume that the goal of a firm is to maximize profit. Total revenue (for a firm) the amount a firm receives for the sale of its output. Total cost the market value of the inputs a firm uses in production. When economists speak of a firm"s cost of production, they include all the opportunity costs of making its output of goods and services. Explicit costs-input costs that require an outlay of money by the firm. Implicit costs-input costs that do not require an outlay of money by the firm. The cost of capital as an opportunity cost. An important implicit cost of almost every business is the opportunity cost of the financial capital that has been invested in the business. If helen has instead left the 000 she used to purchase the company in a savings account it would have earned 000 interest.
