Econ 101 1st Edition Lecture 12 Outline of Last Lecture I. How Economists Measure costs and profitsII. 8.1 Economic Cost and Economic ProfitIII. 8.2 A Firm with a Fixed Production Facility: Short-Run Costs IV. 8.3 Production and Cost In the Long RunOutline of Current Lecture II. Application #3III. Chapter 6: Perfect competitionIV. 9.1 Preview of the Four Market Structures in Chapter 9-12V. 9.2 The Firm’s Short-Run Output DecisionCurrent LectureI. Application #3a. Sea lions off the Washington coast eat steelhead and other fish, depleting some species threatened with extinction and decreasing the harvest of the commercialfishing industryb. Cost to make the first one is $16,000, each additional whale costs $5,000c. The cost of producing the first killer whale is more than three times the cost of producing the secondII. Chapter 6: Perfect competition: Understanding the supply curveIII. 9.1 Preview of the Four Market Structures in Chapter 9-12a. Perfect competitionb. Monopolistic Competitionc. Oligopolyd. MonopolyThese 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.e.f. Assumptions of Perfect competitioni. Many buyersii. Many sellersiii. Product is homogenousiv. No barriers to market entryv. Buyers and sellers are price takersg. Firm-Specific Demand Curve: a curve showing the relationship between the pricecharged by a specific firm and the quantity the firm can sellIV. 9.2 The Firm’s Short-Run Output Decisiona. The firm maximizes total profit where marginal revenue of a unit sold = marginal cost of a unit producedb. The total approach: computing total revenue and total costc. Sunk Cost: a cost that a firm has already paid or committed to pay, so it cannot be recoveredd.e. Break-even price: the price at which total economic profit is zero; price equals average total
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