Econ 240 1st Edition Lecture 9 Outline of Last Lecture I. If Demand ChangesII. If Supply ChangesIII. If Demand and Supply Both Change Outline of Current Lecture II. Production and Cost a. Economic cost and Profit a.i. The Firms Costs a.i.1. Explicit Costa.i.2. Implicit Costa.i.2.a. Economic depreciationa.i.2.b. Opportunity costa.ii. Firm's Goal: To maximize profit Current LectureThe Firm's Costs- Explicit Cost Cost paid in money- Implicit Cost Cost for which direct money payment is not made1. Economic depreciation - Reduction in market value of assets over time 2. Opportunity cost - Earning forgone in order to run the firm These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.◦ (Also called normal profit) Firm's Goal: To maximize profit- Economic Profit = total revenue – Total cost - Total Revenue = Price X Quantity sold- Total cost = Explicit cost and Implicit cost - Implicit cost = Economic depreciation and opportunity cost - Accountants do not count opportunity cost Accounting profit is greater than Economic Profit
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