MCS 1000 Chapter Notes - Chapter 10: Sole Proprietorship, Canada Revenue Agency, Economic Efficiency

• School: University of Guelph
• Department: Marketing and Consumer Studies
• Course: MCS 1000
• Professor: Sergio Meza

Document Summary

Each firm is an institution that hires factors of production and organizes those factors to produce and sell goods and services. A firms goal is to maximize profit. A firm that does not seek to maximize profit is either eliminated or taken over by a firm that does seek that goal. Depre(cid:272)iatio(cid:374) is the fall i(cid:374) the (cid:448)alue of a fir(cid:373)"s (cid:272)apital. To calculate depreciation, accountants use canada revenue agency rules. E(cid:272)o(cid:374)o(cid:373)i(cid:272)s (cid:373)easure a fir(cid:373)"s profit to e(cid:374)a(cid:271)le the(cid:373) to predi(cid:272)t the fir(cid:373)"s de(cid:272)isio(cid:374)s, a(cid:374)d the goal of these decisions is to maximize economic profit. Economic profit: is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production. The opportunity cost of any action is the highest alternative forgone. The opportunity cost of production is the value of the best alternative use of the resources that a firm uses in production.