ECON 2030 Chapter : Econ 2030 Feb 27
Document Summary
The behavior of business as a firm how much do they produce and how much do they charge. Goal is to maximize profits profit = benefit cost to the seller. Total revenue (tr) benefit get paid; total dollars taken in from selling goods and services: tr = p x q (price x quantity) in the simplest sense; dollars in. Total cost (tc) there are monetary and non-monetary costs: explicit dollars out; accounting costs (pay, supplies, etc) implicit dollars not in; if you"re doing one thing you can"t do another. Accounting profit (ap) profit that the accountant would calculate: tr explicit cost, dollars in dollars out. 0 slope at top of parabolic curve, no change. If marginal is greater than average, average increases if marginal is less than average, average decreases if marginal is equal to average, average stays the same. In a restaurant fixed costs: rent variable costs: ingredients, employees.
