文档介绍：The Costs of Production
Chapter 13
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The Costs of Production
The Law of Supply:
Firms are willing to produce and sell a greater quantity of a good when the price of the good is high.
This results in a supply curve that slopes upward.
The Firm’s Objective
Maximum Profits
The economic goal of the firm is to maximize profits.
A Firm’s Total Revenue and Total Cost
Total Revenue
The amount that the firm receives for the sale of its output.
Total Cost
The amount that the firm pays to buy inputs.
A Firm’s Profit
Profit is the firm’s total revenue minus its total cost.
Profit = Total revenue - Total cost
Costs as Opportunity Costs
A firm’s cost of production includes all the opportunity costs of making its output of goods and services.
Explicit and Implicit Costs
A firm’s cost of production include explicit costs and implicit costs.
Explicit costs involve a direct money outlay for factors of production.
Implicit costs do not involve a direct money outlay.
Economic Profit versus Accounting Profit
Economists measure a firm’s economic profit as total revenue minus all the opportunity costs (explicit and implicit).
Accountants measure the accounting profit as the firm’s total revenue minus only the firm’s explicit costs. In other words, they ignore the implicit costs.
Economic Profit versus Accounting Profit
When total revenue exceeds both explicit and implicit costs, the firm earns economic profit.
Economic profit is smaller than accounting profit.
Economic Profit versus Accounting Profit
Revenue
Total
opportunity
costs
How an Economist
Views a Firm
Explicit
costs
Economic
profit
Implicit
costs
Explicit
costs
Accounting
profit
How an Accountant
Views a Firm
Revenue