Boundless Lecture Slides Available on the Boundless Teaching
Boundless Lecture Slides Available on the Boundless Teaching Platform Free to share, print, make copies and changes. Get yours at www. boundless. com
Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Using Boundless Presentations The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Get started now at: http: //boundless. com/teaching-platform Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. If you have any questions or problems please email: educators@boundless. com Free to share, print, make copies and changes. Get yours at www. boundless. com
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Production The Production Function Production Cost Economic Profit Production Free to share, print, make copies and changes. Get yours at www. boundless. com
Production > The Production Function • Defining the Production Function • The Law of Diminishing Returns • Inputs and Outputs of the Function Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/production-9/the-production-function-63/
Production > Production Cost • Types of Costs • Average and Marginal Cost • Short Run and Long Run Costs • Economies and Diseconomies of Scale • Economic Costs Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/production-9/production-cost-64/
Production > Economic Profit • Difference Between Economic and Accounting Profit • Sources and Determinants of Profit Free to share, print, make copies and changes. Get yours at www. boundless. com/economics/textbooks/boundless-economics-textbook/production-9/economic-profit-65/
Appendix Free to share, print, make copies and changes. Get yours at www. boundless. com
Production Key terms • accounting profit The total revenue minus costs, properly chargeable against goods sold. • average cost In economics, average cost or unit cost is equal to total cost divided by the number of goods produced. • capital Already-produced durable goods available for use as a factor of production, such as steam shovels (equipment) and office buildings (structures). • cost A negative consequence or loss that occurs or is required to occur. • economic cost The accounting cost plus opportunity cost. • economic profit The difference between the total revenue received by the firm from its sales and the total opportunity costs of all the resources used by the firm. • explicit cost A direct payment made to others in the course of running a business, such as wages, rent, and materials, as opposed to implicit costs, which are those where no actual payment is made. • fixed cost Business expenses that are not dependent on the level of goods or services produced by the business. • implicit cost The opportunity cost equal to what a firm must give up in order to use factors which it neither purchases nor hires. • marginal cost The increase in cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output. Additional cost associated with producing one more unit of output. Free to share, print, make copies and changes. Get yours at www. boundless. com
Production • marginal cost The increase in cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output. Additional cost associated with producing one more unit of output. • marginal product The extra output that can be produced by using one more unit of the input. • normal profit The opportunity cost of an entrepreneur to operate a firm; the next best amount the entrepreneur could earn doing another job. • Opportunity cost The cost of any activity measured in terms of the value of the next best alternative forgone (that is not chosen). • output Production; quantity produced, created, or completed. • Production function Relates physical output of a production process to physical inputs or factors of production. • rental rate The price of capital. • return to scale A term referring to changes in output resulting from a proportional change in all inputs (where all inputs increase by a constant factor). • returns to scale A term referring to changes in output resulting from a proportional change in all inputs (where all inputs increase by a constant factor). • variable cost A cost that changes with the change in volume of activity of an organization. Free to share, print, make copies and changes. Get yours at www. boundless. com
Production Diminishing Returns As a factor of production (F) increases, the resulting gain in the volume of output (V) gets smaller and smaller. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Diminishing return. " CC BY-SA http: //commons. wikimedia. org/wiki/File: Diminishing_return. jpg View on Boundless. com
Production Calculating total cost This graphs shows the relationship between fixed cost and variable cost. The sum of the two equal the total cost. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "CVP-TC-FC-VC. " CC BY-SA http: //en. wikipedia. org/wiki/File: CVP-TC-FC-VC. svg View on Boundless. com
Production Cost curve This graph is a cost curve that shows the average total cost, marginal cost, and marginal revenue. The curves show each cost changes with an increase in product price and quantity produced. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Costcurve - Combined. " CC BY-SA http: //commons. wikimedia. org/wiki/File: Costcurve_-_Combined. svg View on Boundless. com
Production Cost curve This graph shows the relationship between long run and short run costs. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Relationship between Long-run Cost Curve and Short-run Cost Curve. " CC BY-SA http: //commons. wikimedia. org/wiki/File: Relationship_between_Long -run_Cost_Curve_and_Short-run_Cost_Curve. svg View on Boundless. com
Production Long Run ATC Curves This graph shows that as the output (production) increases, long run average total cost curve decreases in economies of scale, constant in constant returns to scale, and increases in diseconomies of scale. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikispaces. "MBAecon - economies of scale, diseconomies of scale, constant returns to scale. " CC BY-SA http: //mbaecon. wikispaces. com/economies+of+scale, +diseconomies+of+scale, +constant+returns+to+scale View on Boundless. com
Production Factory Production Manufacturing companies use their production function to determine the optimal combination of labor and capital to produce a certain amount of output. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Wolfsburg VW-Werk. " CC BY http: //en. wikipedia. org/wiki/File: Wolfsburg_VW-Werk. jpg View on Boundless. com
Production Cost Curves in the Short Run Both marginal cost and average cost are U-shaped due to first increasing, and then diminishing, returns. Average cost begins to increase where it intersects the marginal cost curve. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikimedia. "Profit max marginal small. " CC BY-SA http: //commons. wikimedia. org/wiki/File: Profit_max_marginal_small. svg View on Boundless. com
Production Long-Run Profit for Monopoly In the long run, a monopoly, because of its market power, can set a price above the competitive equilibrium and earn economic profit. If price were set equal to the minimum point of the average total cost (ATC) curve, the monopoly would earn zero economic profit. If the price were set lower than the minimum of ATC, the firm would earn negative economic profit. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Imperfect competition in the short run. " CC BY-SA http: //en. wikipedia. org/wiki/File: Imperfect_competition_in_the_short_run. svg View on Boundless. com
Production Capital Goods Capital equipment, like these motor graders, can vary in the long run but are fixed in the short run. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "FM CN 668080. " CC BY-SA http: //en. wikipedia. org/wiki/File: FM_CN_668080. jpg View on Boundless. com
Production Economic vs. Accounting Profit The biggest difference between economic and accounting profit is that economic profit takes implicit, or opportunity, costs into consideration. Free to share, print, make copies and changes. Get yours at www. boundless. com Flickr. "y 2 cary 3 n 6 mng-10 hdli-accounting-profit-vs-economic- | Flickr - Photo Sharing!. " CC BY-SA http: //www. flickr. com/photos/sampjb/7690680134/ View on Boundless. com
Production Long-Run Profit for Perfect Competition In the long run for a firm in a competitive market, there is zero economic profit. Graphically, this is seen at the intersection of the price level with the minimum point of the average total cost (ATC) curve. If the price level were set above ATC's minimum point, there would be positive economic profit; if the price level were set below ATC's minimum, there would be negative economic profit. Free to share, print, make copies and changes. Get yours at www. boundless. com Wikipedia. "Economics Perfect competition. " CC BY-SA http: //en. wikipedia. org/wiki/File: Economics_Perfect_competition. svg View on Boundless. com
Production Attribution • Wiktionary. "marginal cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/marginal_cost • Wiktionary. "output. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/output • Wikipedia. "Production function. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Production%20 function • Wikipedia. "Production function. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Production_function • Wiktionary. "marginal cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/marginal_cost • Wikipedia. "returns to scale. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/returns%20 to%20 scale • Wikipedia. "Cost curve. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Cost_curve%23 Relationship_between_short_run_and_long_run_cost_curves • Wikipedia. "Diminishing returns. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Diminishing_returns • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/rental-rate • Wikipedia. "marginal product. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/marginal%20 product • Wiktionary. "capital. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/capital • Wikipedia. "Production theory. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Production_theory • Wikibooks. "IB Economics/Microeconomics/Theory of the Firm (HL). " CC BY-SA 3. 0 http: //en. wikibooks. org/wiki/IB_Economics/Microeconomics/Theory_of_the_Firm_(HL) • Wiktionary. "variable cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/variable_cost • Wikipedia. "fixed cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/fixed%20 cost • Wikipedia. "Total cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Total_cost • Wikipedia. "Fixed cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Fixed_cost Free to share, print, make copies and changes. Get yours at www. boundless. com
Production • Wikipedia. "Variable cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Variable_cost • Wikipedia. "Economic cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Economic_cost • Wiktionary. "marginal cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/marginal_cost • Wikipedia. "average cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/average%20 cost • Wikipedia. "Average cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Average_cost • Wikipedia. "Marginal cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Marginal_cost • Wiktionary. "variable cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/variable_cost • Wikipedia. "fixed cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/fixed%20 cost • Wikipedia. "Average cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Average_cost • Wikipedia. "Economics. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Economics%23 Production. 2 C_cost. 2 C_and_efficiency • Wikipedia. "Long run and short run. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Long_run_and_short_run • Wikipedia. "average cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/average%20 cost • Wikipedia. "return to scale. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/return%20 to%20 scale • Wikispaces. "MBAecon - economies of scale, diseconomies of scale, constant returns to scale. " CC BY-SA http: //mbaecon. wikispaces. com/economies+of+scale, +diseconomies+of+scale, +constant+returns+to+scale • Wikipedia. "Returns to scale. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Returns_to_scale • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/economic-cost • Wiktionary. "Opportunity cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/Opportunity+cost • Wiktionary. "cost. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/cost • Wikipedia. "Cost curve. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Cost_curve Free to share, print, make copies and changes. Get yours at www. boundless. com
Production • Wikipedia. "Marginal cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Marginal_cost • Wikipedia. "Economic cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Economic_cost • Wiktionary. "accounting profit. " CC BY-SA 3. 0 http: //en. wiktionary. org/wiki/accounting_profit • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/economic-profit--2 • Wikipedia. "implicit cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/implicit%20 cost • Wikipedia. "explicit cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/explicit%20 cost • Wikipedia. "Opportunity cost. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Opportunity_cost • Wikispaces. CC BY-SA http: //microecon 201. wikispaces. com/Profit+ the+difference+between+economic+and+accounting+costs, +economic++profit, +economic+losses, +and+zero+economic+profit • Wikipedia. "Profit (economics). " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Profit_(economics) • Wikispaces. "Econ 651 Spring 2008 - Profit - the difference between economic and accounting costs, economic profit, economic losses, and zero economic profit. " CC BY-SA http: //econ 651 spring 2008. wikispaces. com/Profit++the+difference+between+economic+and+accounting+costs, +economic+profit, ++economic+losses, +and+zero+economic+profi t • Wikispaces. CC BY-SA http: //mbaecon. wikispaces. com/Profit+ the+difference+between+economic+and+accounting+costs, +economic++profit, +economic+losses, +and+zero+economic+profit • Boundless Learning. "Boundless. " CC BY-SA 3. 0 http: //www. boundless. com//economics/definition/normal-profit • Wikipedia. "Contestable market. " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Contestable_market • Wikipedia. "Profit (economics). " CC BY-SA 3. 0 http: //en. wikipedia. org/wiki/Profit_(economics) Free to share, print, make copies and changes. Get yours at www. boundless. com
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