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
Sections
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?