ECN 104 Study Guide - Final Guide: Taipei Metro, Average Variable Cost, Monopoly Profit
16 Jun 2013
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Industry: a group of firms producing similar products. Monopoly: only one firm in the entire industry. Examples of firms: tina"s taxi service: sole proprietorship| tim horton"s: franchise| | s&k associates: partnership | bombardier: corporation | canada post: crown corporation. **tp= total product | mp= marginal product mp= Change in worker input not really important. Short run production: some resources are fixed other resources are variable. Relationship between mp & ap (marginal product & average product: when mp > ap, ap , when mp < ap, ap , when mp = ap, ap is maximum. The law of diminishing returns: other things being equal, as we add more and more variable resources to fixed resources eventually tp increases at a slower and slower rate. Explicit: out of pocket expenses paid to others. Implicit: costs of using one"s own resources, which is not paid out. Economic profit= tr (explicit cost + implicit cost)
