KWChapter7_StudentSlides_compressed.pptVIP

CHAPTER 7 Making Decisions PowerPoint? Slides  by Can Erbil ? 2004 Worth Publishers, all rights reserved Case study A tale of two invasions-refer to page 160 What you will learn in this chapter Key contents: Analysis of costs Analysis of margin Opportunity Cost and Decisions An explicit cost is a cost that involves actually laying out money. An implicit cost does not require an outlay of money; it is measured by the value, in dollar terms, of the benefits that are forgone. 由放弃的收益价值来衡量. Accounting Profit Versus Economic Profit The accounting profit of a business is the business’s revenue minus the explicit costs and depreciation. The economic profit of a business is the business’s revenue minus the opportunity cost of its resources. It is often less than the accounting profit. Capital The capital of a business(企业的资本) is the value of its assets—equipment, buildings, tools, inventory, and financial assets. The implicit cost of capital is the opportunity cost of the capital used by a business—the income the owner could have realized from that capital if it had been used in its next best alternative way. (企业使用资源的机会成本,即资源所有者如将资源用到别处可能得到的最大收入) “How Much” Versus “Either–Or” Decisions Marginal Cost Increasing Marginal Cost Felix’s marginal cost is greater the more lawns he has already mowed. That is, each time he mows a lawn, the additional cost of doing yet another lawn goes up. There is increasing marginal cost（边际成本递增） from an activity when each additional unit of the activity costs more than the previous unit. Marginal Benefit The marginal benefit（边际收益） from an activity is the additional benefit derived from undertaking one more unit of that activity. Decreasing Marginal Benefit Each additional lawn mowed produces less benefit than the previous lawn ? with decreasing marginal benefit, each additional unit produces less benefit than the unit before. There is decreasing marginal benefit（边际收益递减） from an activity when each additional unit of