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economics10

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Week 2 Class
Session 4
Opening: the professor opening remarks concerned setting up the audio and referencing the midterm
exam.
Chapter 9
Explicit costs that you have to pay out side of your company. These include rent, electricity
outside work forces. Taking college as an example would be a computer, books and tution fees.
Implicts costs are basically the opportunity costs that are lost s a result of your effort. The
foregone costs that such as loss of earnings.
Accounting cost versus economic costs were another type of costs that was covered in the
class/
Accounting costs = explicit costs
Economic cost =implicit costs + explicit costs
Total revenue equals price x quantity
The professor gave is a number of formulas such as.
To get Accounting profit extract the explicit costs from the revenue.
To calculate economic profit , subtract both the explicit and implicit costs gtom the totl revenue
Economic profits are less than accounting profits( because of the implicit costs)
Negative economic profits means that you are losing mother as opposed to what you would be
making if engaged in other or prior economic activities.
The capital of a business is the value of its assets, equipment, tools, building tools, inventory
and financial assets.
The implicit cost of capital is the opportunity cost of capital to the the business. How could the
capital have been used elsewhere?
Marginal ANALYSIS
Profit-maximizing principle of marginal analysis:

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According to the Marginal decision rule;, if the marginal benefit is: more than the marginal , net benefit
is maximized,
The optimal quantity is the
For a profit-maximizing “how much” decision, the optimal quantity is the largest quantity at
which the marginal benefit is greater than or equal to marginal cost.
Sunk costs are costs that have been already incuured and is non recoverable.
An example the professor gave was waiting in line for twenty minutes at a supermarket and a
nother line opens. That twenty mins is a sunk cost and should not have any effect on your
decision.
Chapter 11: Behind the supply curve: inputs and costs
The professors opening remarks covered a production function, a fixed input, a variable
input, the long run and the Short run.
A fixed input would be if you were leasing land or office space for 3 year and during those 3
years you costs are fixed.
In the long run you change things.
The production function shows the relation of workers hired in relation to output.
As they hire more wokers output increase
If you bring too many workers on board then the productivity goes down.
The variable cost is a cost that depends on the quantity of output produced
# It is the cost of the variable input
The marginal product of labor curve showed the diminishing returms to an imput. At some
point the increase diminishes as each worker adds incrementaly less.
The total cost of producting is the variable plus the fixed cost.
Marginal cost means additiona cost
It is calculate by change in total cost divided by change in output
Fixed costs are short run

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Week 2 Class Session 4 Opening: the professor opening remarks concerned setting up the audio and referencing the midterm exam. Chapter 9 Explicit costs that you have to pay out side of your company. These include rent, electricity outside work forces. Taking college as an example would be a computer, books and tution fees. Implicts costs are basically the opportunity costs that are lost s a result of your effort. The foregone costs that such as loss of earnings. Accounting cost versus economic costs were another type of costs that was covered in the class/ Accounting costs = explicit costs Economic cost =implicit costs + explicit costs Total revenue equals price x quantity The professor gave is a number of formulas such as. To get Accounting profit extract the explicit costs from the revenue. To calculate economic profit , subtract both the explicit and implicit costs gtom the tot ...
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