曼昆经济学原理教案2-全英文Chap13.ppt

The Costs of Production Chapter 13 The Costs of Production The Law of Supply: Firms are willing to produce and sell a greater quantity of a good when the price of the good is high. This results in a supply curve that slopes upward. The Firm’s Objective The economic goal of the firm is to maximize profits. A Firm’s Total Revenue and Total Cost Total Revenue The amount that the firm receives for the sale of its output. Total Cost The amount that the firm pays to buy inputs. A Firm’s Profit Profit is the firm’s total revenue minus its total cost. Profit = Total revenue - Total cost Costs as Opportunity Costs A firm’s cost of production includes all the opportunity costs of making its output of goods and services. Explicit and Implicit Costs A firm’s cost of production include explicit costs and 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 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. Economic Profit versus Accounting Profit When total revenue exceeds both explicit and implicit costs, the firm earns economic profit. Economic profit is smaller than accounting profit. Economic Profit versus Accounting Profit A Production Function and Total Cost The 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. Marginal Product The marginal product of any input in the production process is the increase in the quantity of output obtained from an additional unit of that input. Marginal Product Diminishing Marginal Product Diminishing marginal product is the property whereby the marginal product of an input declines as the