Frank弗兰克-经济学原理-微观-第4版课件ch8.pptVIP

Pudges friends tell him that the problem with his farm is that he rents the land. They tell Pudge he would make more money if he owned the farm. Suppose Pudge inherits the land he farms. Does that change his economic profit? Pudge still supplies $11,000 in labor to the farm. Now he supplies land. The opportunity cost of the land is $6,000, the exact amount he used to pay in rent. Pudges accountant congratulates Pudge, telling him that he has $18,000 in profit this year. Whats changed is that $6,000 in explicit costs have become $6,000 in implicit costs. Pudge has a bit more cash, but his economic profits have not changed. * Of the two functions of price, one applies to buyers and one applies to sellers. The buyers idea is that price signals the scarcity value of a good or service. If something is expensive, then highly valued resources were used to produce it and the price mechanism rations that product to those who value it most highly. This is the rationing function of price. The allocative function of price works on directing resources. High wages or other payments to inputs signal that a market is underserved. The high price for resources gives resource owners an incentive to sell their resources in that market. The Invisible Hand is the name economists have given to the results produced by a market system. There is no central plan, no bulletin board where assignments are posted. Each of us searches out opportunities to use or sell our resources. We sell to the highest bidder. The firm tries to maximize profits by managing its costs for a given level of output. It uses the most plentiful resources first and conserves the high-priced resources. Each participant, acting on his own best interests, lead the markets to their long-run equilibrium where total surplus is maximized. * In a perfectly competitive market, excess profits signal an opportunity for potential market players. As weve already seen, a firm earns a profit if the price of its good is