Ch. 10 - The Costs of ProductionWorksheetSee all chapters
All Chapters
Ch. 1 - Introduction to Microeconomics
Ch. 2 - Introductory Economic Models
Ch. 3 - Supply and Demand
Ch. 4 - Elasticity
Ch. 5 - Consumer and Producer Surplus; Price Ceilings and Floors
Ch. 6 - Introduction to Taxes and Subsidies
Ch. 7 - Externalities
Ch. 8 - The Types of Goods
Ch. 9 - International Trade
Ch. 10 - The Costs of Production
Ch. 11 - Perfect Competition
Ch. 12 - Monopoly
Ch. 13 - Monopolistic Competition
Ch. 14 - Oligopoly
Ch. 15 - Markets for the Factors of Production
Ch. 16 - Income Inequality and Poverty
Ch. 17 - Asymmetric Information, Voting, and Public Choice
Ch. 18 - Consumer Choice and Behavioral Economics
Revenue, Cost, and Profit
The Production Function and Diminishing Returns
Marginal Cost
The Relationship Between Average Cost and Marginal Cost
Graphing Costs
Average Total Cost: Short Run and Long Run
Isoquant Lines
Isocost Lines
Cost-Minimizing Combination of Labor and Capital
Step 1: Go to college. Step 2: Pass microeconomics. Step 3: ??? Step 4: PROFIT

Concept #2: Explicit and Implicit Cost

Concept #3: Accounting Profit and Economic Profit

Practice: Fast Fingers Freddy gives banjo lessons for $50 per hour. One day, he spends 8 hours planting $100 worth of seeds on his farm. If the seeds yield $600 worth of crops, what is his accounting profit and economic profit?

Practice: Ricky Smooth opens up a hunch punch stand in his dorm room every Wednesday for two hours. He spends $40 on ingredients and sells $120 worth of hunch punch. In those same two hours, Ricky could have been a nude model for the art department earning $60. Ricky Smooth has an accounting profit of ________ and an economic profit of ________.

Practice: Sweetie Nick has dreamt of owning a candy store his whole life. Unfortunately, after a few wrong turns, Sweetie Nick finds himself stuck in a job he hates, earning a nice salary of $100,000, but he is completely dead inside. One day, Sweetie Nick is fed up and decides to quit his job and open a candy store. He takes his $300,000 savings, which were earning 5% interest, and buys a property downtown. In his first year, Sweetie Nick sells $220,000 worth of candy that he purchased for $80,000. He also paid utilities of $2,000 and hired a cashier that earned $16,000 throughout the year. What is Sweetie Nick’s accounting profit and economic profit?

Concept #4: Fixed Costs and Variable Costs; Short Run and Long Run

Practice: A short run cost function assumes that:

Practice: A company currently has total costs of $4,096 when producing 128 units. If total fixed costs equal $1,024, what is average variable cost?

Practice: Rose incurs $7,200 per month in fixed costs operating her floral shop. She pays her employees $9 per hour and had three assistants working 120 hours this month. Her other variable costs were $800 this month. What are Rose’s total variable costs and total costs this month?