Chapter 10 - Organizing Production Flashcards
1
Q
Firm’s objective
A
Maximize proffit
2
Q
Total costs
A
Explicit costs + implicit costs
3
Q
Explicit cost
A
Cost paid directly in money for resources bought in the market.
4
Q
Economic profit
A
A firm’s total revenue minus its economic costs.
5
Q
Normal proffit
A
Part of the firm’s total costs, so economic profit is profit over and above normal profit
6
Q
Firm’s constraints
A
- Technology constraints
- Information constraints
- Market constraints
7
Q
Technology efficiency
A
Impossible to produce given output of a good by decreasing any 1 input, holding all other inputs constant
8
Q
Economic efficiency
A
Firm produces a given level of output at lowest possible costs. Depends on relative costs of capital and labor.
