revenue and total economic costs 5 Profit Maximization • If firms are strictly profit maximizers, they will make decisions in a “marginal” way – examine the marginal profit obtainable from producing one more unit of hiring one additional laborer 6 Output Choice • Total revenue for a firm is given by R(q) = p(q)q • In the production of q, certain economic costs are incurred [C(q)] • Economic profits () are the difference between total revenue and total costs (q) = R(q) – C(q) =
Words: 2497 - Pages: 10
1. Joe Holiday has the opportunity to operate a business renting beach umbrellas next summer. He will operate the concession for 3 months. Looking at weather patterns, Joe observes that rain is frequent along this stretch of beach, and on average, there are only 60 rentable days in a summer. In each of these days, Joe believes he can rent 40 umbrellas per day at $7 per rental. Joe will run the concession by himself day, and must pay Beachcomber Enterprises $9,000 for the concession (the use of
Words: 1812 - Pages: 8
facilities, in some cases it even allows for competitive bidding for boarding gates and landing rights thus encouraging competition among airlines, and it also might encourage airport authorities to increase supply when bid values are higher than costs. This has in part turned the industry to an oligopoly over the different markets in which it competes. Although many aspects of the airline industry have been deregulated for over 30 years now, many other aspects of the industry are still highly
Words: 1852 - Pages: 8
has gotten a lot more urgent. This may mean that I have to dip into my savings or add more money to my savings until I’m ready to have my kids. Marginal benefits and cost are ideas that go with one or more units. When purchasing a home this usually a choice with purchasing one, zero, or all benefits and cost. The concept of marginal may lose its meaning. The power of the economy can affect home ownership because places the value of the home. Buying a house is the most costly asset
Words: 290 - Pages: 2
Inquiry on Adam Smith’s “Wealth of Nations” Deonisio Ed Benigno C. Manuel Strayer University Law Ethics and Corporate Governance 500 Professor Glen Trimper March 2, 2011 Term Paper Abstract The principal objective of this term paper is to show my understanding on the “Wealth of Nations” book by Adam Smith. The book contains a collection of ideas and thoughts made into essays that were synthesized in the creation of this book. It tells us information on how the economy progressed from
Words: 3250 - Pages: 13
questions. a. What is the firm’s Total Revenue? This firm will produce where Marginal Cost (MC) is equal to Marginal Revenue (MR). MC = MR at point G. Total Revenue is equal to Price times the Quantity or TR = (P)(Q). This is a monopoly and it will produce at the demand curve; so, the point is shifted to point J. Therefore, total revenue can be represented by area enclosed by the points 0, A, J, and E. b. What is the Total Cost? The firm’s
Words: 505 - Pages: 3
up one of them. So the opportunity cost is the cost of any activity measured in terms of the best alternative forgone. He or she has to make the rational decision(choices that involve weighing up the benefit of any activity against its opportunity cost, ) it’s depend on the marginal cost has smaller than the marginal benefits. Marginal cost is the additional cost of doing a little bit more (or 1 unit more if a unit can be measured) of an activity. The marginal benefits is the additional benefits
Words: 280 - Pages: 2
The decision to purchase a home is one of the most important decisions a person can make. A person should think about the decision and analyze every aspect that comes along with it, prior to the medium of exchange. The economy should be a major thought in the decision making process. The economy is not in the best shape, so to know if the decision to purchase a home is the right one a person must analyze his or her situation and a weigh his or her options. In addition, a home comes with some
Words: 1959 - Pages: 8
in order to generate appreciable return on investment to the shareholders and contribute to the wellbeing of the environment that it operates in. in the bid to achieve these objectives firms have to contend with challenges of competition and being cost effective in their operations. The former is beyond the Firm and has to find a way to manage so as to influence its outcome while the other is within the firms grasp. These have the tendency to overwhelm the firm if not properly monitored. Success
Words: 3084 - Pages: 13
they know it or not. Although many may not realize it, we all make decisions based on the four principles of economics which are: the cost, the incentive, the trade-off, and the margin. Economics is the study of how a society manages the scarce resources it has. When a consumer decides to make a purchase the first principle comes into play, how much will the item cost. The second principle, at least for me, becomes what are the incentives to make the purchase. The third principle for economic decision
Words: 670 - Pages: 3
