ECON 2 Lecture Notes - Lecture 22: Fixed Cost, Profit (Economics), Diminishing Returns

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23 Dec 2020
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Explicit costs: monetary payments the firm makes to those from whom it must purchase resources that it does not own. Economic costs= explicit costs + implicit costs. Accounting profit and normal profit: accounting profit= revenue explicit costs, economic profit= accounting profit implicit costs, economic profit (summary, =total revenue economic costs, =total revenue explicit costs implicit costs. Short run and long run: short run: a period to brief for a firm to alter its plant capacity, yet long enough to permit a change in the degree to which the plant"s current capacity is used. Firm"s capacity is fixed in the short run: long run: is period long enough for a firm to adjust the quantities of all the factors that it employs, including plant capacity. Total product: total quantity or total output of a particular good or service produced. Marginal product: extra output associated with adding a unit of variable input to the production process.

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