ECON 3070 Chapter 7: ECON3070 Chapter07
Document Summary
7. 1 cost concepts got decision making explicit costs: costs that involve a direct monetary outlay implicit costs: costs that do not involve outlays of cash outlay(n) an amount of money that is spent. The cost-minimization problem cost-minimization problem: the problem of nding the input combination that minimizes a. Rm"s total cost of producing a particular level of output cost-minimizing rm: a rm that seeks to minimize the cost of producing a given amount of output. want to minimize the rm"s total costs, subject to the requirement that the rm produce a given amount of output price of labor. Explicit costs if the rm hires workers in the open market. Implicit costs the rm"s owner provides her own labor to run the rm and, in so doing, sacri ces outside employment opportunities price of capital. Explicit costs if the rm leased capital services from another rm.
