ECON 160 Chapter Notes - Chapter 13: Average Cost, Average Variable Cost, Marginal Cost

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indigoraven449

29 Nov 2016

School

Binghamton University

Department

Economics

Course

ECON 160

Professor

Susan W.Hanes

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Document Summary

Law of supply: firms are willing to produce and sell a greater quantity of a good when the price of the good is higher, and its response leads to a supply curve that slopes upward. Industrial organization: the study of how firms" decisions about prices and quantities depend on the market conditions they face: total revenue, total cost, and profit. Assume that the goal of a firm is to maximize profit. Total revenue: the amount that the firms receive for the sale of its output. Calculated by: the quantity of output the firm produces x the price at which it sells its output. Total cost: the amount that the firm pays to buy inputs. Calculated by: sum of explicit and implicit costs. Profit is total revenue - total cost: costs as opportunity cost. Explicit cost: input costs that requires an outlay of money by the firm.

Related Questions

Question:

Evaluate the following statement:

In the short-run, information about a perfectly competitive firm's fixed costs is needed to determine both the profit-maximizing level of output and the amount of profit earned when producing that level of output.

Answer:

The objective of a firm is to maximize profits. In determining output, the firm may be subject to two constraints: costs of production and consumer demand. The price that a perfectly competitive firm may sell its products, is determined by consumer demand. Production costs are determined by the technology used. Profits are the difference between total revenues and total costs. Pertaining to short-run profit maximization, firms maximize profits by choosing the output level where its marginal revenue equals its marginal cost.

Farnham, P. G. (2014). Economics for Managers (3rd Ed.).

I need a peer reply for this, please.

sangriacockroach968

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit), and this is equal to the (total cost , quantity of output total price or total profit).

(each are fill in the blank and need one of the terms listed).

ultramarinewoodchuck739

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit) , and this is equal to the (total cost , quantity of output, total price or total profit) .

(each are fill in the blank and need one of the terms listed).

greymouse802

ECON 160 Chapter Notes - Chapter 13: Average Cost, Average Variable Cost, Marginal Cost

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