ECE 394 Chapter Notes - Chapter 12: Marginal Cost, Marginal Product, Opportunity Cost

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Making a pro t and maximizing pro ts are the central goals of a business. Total revenue: the amount that a rm receives from the sales of goods and services. Tr= quantity sold x price paid for each unit. Tr for more than one product= (q1 x p1)+ (q2 x p2) . Total cost: the amount that a rm pays for ll of the inputs that go into producing goods and services. Includes one-time expenses: buying machinery ongoing expenses: rent, salaries, raw materials anything and everything that goes into companies making products combination of all xed costs and variable cost. Fixed cost: cost that do not depend on the quantity of output produced cost remains the same regardless of how much is produced. Variable cost: costs that depend on the quantity of output being produced costs depend on the level of production ex. raw materials, labor cost. If a rm stops producing, vc=0, but fc remain the same.

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