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ECON 2310 Chapter Notes - Chapter 8: Longrun

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azurecrow744
17 Dec 2011
School
University of Guelph
Department
Economics
Course
ECON 2310
Professor
Johanna Goertz

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Document Summary

A firm"s total cost is the expenditure required to produce that output in the most economical way. To make good pricing & output decisions, managers need to now the total cost of producing different levels of output. A fixed cost is avoidable if the firm doesn"t incur that cost (or can recoup it) if it produces no output. Variable cost function: describes the variable costs\ of producing each possible level of output vc = vc (output) Time given up to run company (not shown on firms accounts) Opportunity cost: cost associated with foregoing the opportunity to employ a resource in its best alternative use. The cost of using a stored input equals the price the firm could sell it for . By using inputs a firm foregoes the opportunity to sell them. Most firms own much of the capital they use in production.

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Related Questions

The law of increasing opportunity costs states that:

a. The opportunity cost of each additional unit of output of a good over a period of time decreases as more of that good is produced.
b. Increasing resource prices are inevitable because of scarcity.
c. The opportunity cost of each additional unit of output of a good over a period of time increases as more of that good is produced.
d. Resources are easily adaptable to the production of any good. Economic growth is always associated with inflation.
c. The opportunity cost of each additional unit of output of a good over a period of time increases as more of that good is produced.

Economic costs of production differ from accounting costs in that:

A) economic costs include expenditures for hired resources while accounting costs do not.
B) economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
C) accounting costs include expenditures for hired resources while economic costs do not.
D) accounting costs are always larger than economic cost.

When a negative externality exists, the private market produces

A) products at a high opportunity cost.

B) more than the economically efficient output level.

C) products at a low opportunity cost.

D) less than the economically efficient output level.