(微观经济学英文课件）Chap 13 The costs of production教程教案.pptVIP

Harcourt, Inc. items and derived items copyright ? 2001 by Harcourt, Inc. The Costs of Production Chapter 13 Unit 1 production function Unit 2 cost Unit 3 To the Explicit costs The Firm’s Objective The economic goal of the firm is to maximize profits. A Firm’s Profit Profit = Total revenue - Total cost Unit 1 production function The production function shows the relationship between quantity of inputs used to make a good and the quantity of output of that good. input output firm AP TP MP Q L derivative slope inflexion Diminishing Marginal Product Diminishing marginal product is the property whereby the marginal product of an input declines as the quantity of the input increases. Example: As more and more workers are hired at a firm, each additional worker contributes less and less to production because the firm has a limited amount of equipment. Long run product function Q = f (L,K) Unit 2 cost About cost? A firm’s cost of production includes all the opportunity costs of making its output of goods and services. Explicit costs Vs. 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 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 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. Unit 3 To the Explicit costs 1.Cost in a short-run 2.Cost in a long-run In the short run some costs are fixed. In the long run fixed costs become variable costs. 1.Cost in a short-run Fixed and Variable Costs Fixed costs are those costs that do not vary with