HomeTextbook Notes300,000US110,000

ECON 1116 Chapter Notes - Chapter 13: Production Function, Marginal Cost, Marginal Product

41 views5 pages

14 Mar 2016

School

Northeastern University

Department

Course

Professor

Pritchard Robert

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Total revenue the amount that the firm receives for the sale of its output. Total cost the amount that the firms pays to buy inputs. Profit is a firm"s total revenue minus its total cost: profit = total revenue- total cost. Explicit costs an opportunity cost of a firm that requires them to pay out some money. Implicit costs an opportunity cost of a firm that does not require it to pay out money. Total cost the sum of the implicit and explicit costs. Economic profit measured as the firm"s total revenue minus all the opportunity costs (explicit and implicit) Accounting profit measured as the firm"s total revenue minus only the firm"s explicit. Production function the relationship between the quantity of inputs and the quantity of output: the slope of the production function measures the marginal product of a worker. As the marginal product declines the production function becomes flatter.

Related Documents

ECON 1116 Lecture Notes - Lecture 7: Cupcake, Marginal Revenue, Marginal Cost

cerisegiraffe538

ECON 1116 Study Guide - Midterm Guide: Repeated Game, Externality, Nash Equilibrium

ECON 1116 Chapter Notes - Chapter 14: Average Variable Cost, Sunk Costs, Marginal Revenue

Related Questions

Accounting profit is equal to total revenue minus the explicit cost of producing goods and services while economic profit is the difference of total revenue minus the sum of both explicit and implicit costs. Therefore, the economic profit

1. is always at least as large as accounting profit if the implicit cost is greater than zero.

2. is always less than accounting profit if the implicit cost is greater than zero.

3. will always exceed accounting profit.

4. will always equal to accounting profit.

orchidrabbit535

5. Economic profit is equal to

a. total revenue minus the explicit cost of producing goods and services.

b. total revenue minus the opportunity cost of producing goods and services.

c. total revenue minus the accounting cost of producing goods and services.

d. average revenue minus the average cost of producing the last unit of a good or service.

6. Accounting profit is equal to

a. marginal revenue minus marginal cost.

b. total revenue minus the explicit cost of producing goods and services.

c. total revenue minus the opportunity cost of producing goods and services.

d. average revenue minus the average cost of producing the last unit of a good or service.

7. Economic profit

a. will never exceed the accounting profit.

b. is most often equal to accounting profit

c. is always at least as large as accounting profit.

d. is a less complete measure of profitability than accounting profit

8. Which of the following expressions is correct?

a. accounting profit = total revenue - explicit costs

b. economic profit = total revenue - implicit costs

c. economic profit = total revenue - explicit costs

d. Both a and b are correct

Scenario 13-2:

Zach took $400,000 out of the bank and used it to start his new cookie business. The bank account pays 3% interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50. Also during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000.

9. Zach's accounting profit for the year was

10. Zach's economic profit for the year was

Scenario 14-1:

As part of an estate settlement, Mary received $1 million. She decided to use the money to purchase a small business in Anywhere, USA. If Mary would have invested the $1 million in a risk-free bond fund she could have made $100,000 each year. She also quit her job with Lucky.Com Inc. to devote all of her time to her new business; her salary at Lucky.Com Inc. was $75,000 per

11. At the end of the first year of operating her new business, Mary's accountant reported an accounting profit of $150,000. What was Mary's economic profit?

a. $25,000 loss

c. $25,000 profit

d. $150,000 profit

1. When a profit-maximizing firm produces, they will be producing at that output at which marginal cost = marginal revenue:

all of the time
some of the time
on rare occasions
none of the time

2. Economics Profit is:

the same as accounting profit
sales minus explicit costs and implicit costs
sales minus variable costs and fixed costs
opportunity cost only

3. A market structure with so many firms that no one firm has any influence over price, and firms produce an identical product is called:

monopoly
oligopoly
perfect competition
monopolistic competition

4. Which of the following is NOT a characteristic of a perfectly competitive market?

identical products
perfect mobility
perfect knowledge
price maker

5. The demand curve in a perfectly competitive market is perfectly elastic.

true
false

emeraldwombat313