ECON 1000 Study Guide - Final Guide: Product Differentiation, Oligopoly, Sole Proprietorship

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ECON 1000 Full Course Notes

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Econ1000 lecture 13 chapter 10: organizing production objectives: Explain what a firm is and describe the difference between normal profit and economic profit. Define and explain different types of business organizations. Describe and distinguish between the types of markets in which firms operate. A firm is an institution that hires factors of production and organizes them to produce and sell goods and services. The value of the best alternative use of resources: the sum of the cost of using the following resources (explicit costs plus implicit costs) The implicit rental rate of capital is made up of: Economic depreciation is the change in the market value of capital over a given period. The owner might supply both entrepreneurship and labour. The profit that an entrepreneur can expect to receive on average is called normal profit. The imputed wage for the entrepreneur is another opportunity cost. To maximize profit, a firm must make five basic decisions:

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You may be aware that there are three types of profit: accounting profit, economic profit, and normal profit. The difference between the total revenue and the sum of the explicit and implicit costs of an organization results in economic profit. It is commonly assumed that every firm's goal is to maximize its profit, and the economic theory of business is built on this underlying assumption. Address the following in detail: Describe the economic principles that company executives should consider when developing a strategy or strategies that will maximize profits while minimizing incentives for competitors to develop competing products. Explain why each of these economic principles is important to the company's strategy. Recommend and justify a strategy that you believe will maximize profits while minimizing incentives for increased competition.

crimsonhedgehog165

You may be aware that there are three types of profit: accounting profit, economic profit, and normal profit. The difference between the total revenue and the sum of the explicit and implicit costs of an organization results in economic profit. It is commonly assumed that every firm's goal is to maximize its profit, and the economic theory of business is built on this underlying assumption. Address the following in detail: Describe the economic principles that company executives should consider when developing a strategy or strategies that will maximize profits while minimizing incentives for competitors to develop competing products. Explain why each of these economic principles is important to the company's strategy. Recommend and justify a strategy that you believe will maximize profits while minimizing incentives for increased competition.

blackbat76

5. Distinguish between explicit and implicit costs, giving examplesof each. What are the explicit and implicit costs of attendingcollege? Why does the economist classify normal profit as a cost?Is economic profit a cost of production?

6. What is a sunk cost? Provide an example of a sunk cost otherthan one found in the text. Why are such costs irrelevant in makingdecisions about future actions?

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ECON 1000 Study Guide - Final Guide: Product Differentiation, Oligopoly, Sole Proprietorship

ECON 1000 Full Course Notes

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