EC120 Lecture Notes - Lecture 7: Marginal Cost, Marginal Product, Average Variable Cost
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EC120 Full Course Notes
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This chapter looks at firm behaviour in more detail. Helen, the owner of the firm buys flour, sugar, choco chips and other ingredients. Total revenue the amount a firm receives for the sale of its output. Total cost- sum of fixed costs and variable costs. A firms cost of production includes the opportunity costs: explicit costs input costs that require an outlay of money by the firm, implicit costs- costs that don"t require outlay of money from firm ( ie, Ex, helen used 000 to buy business. If instead she had put this in a savings acc at 5 percent interest, she would ear. The forgone is the cost of capital as opportunity cost. Total rev explicit costs (most common profit idea) Ie, any payments used to purchase land, resources etc. to make profit. Economic profit is difference between a firm"s total revenue and the sum of its explicit and implicit costs.
