Chapter 8 COST FUNCTIONS Copyright ©2005 by South-western, a division of Thomson learning. All rights reserved. 1 Definitions of Costs • It is important to differentiate…

1. • Explicit Costs – Accounting Costs • Economic Costs – Implicit Costs – Alternative or Opportunity Costs • Relevant Costs – Incremental Costs – Sunk Costs…

Slide 1 Chapter 8 © 2006 Thomson Learning/South-Western Costs Slide 2 2 Basic Concepts of Costs Opportunity cost: the cost of a good or service as measured by the alternative…

Slide 1 Definitions of Costs It is important to differentiate between accounting cost and economic cost – the accountant’s view of cost stresses out-of- pocket expenses,…

Slide 1 Lecture #7 Slide 2 Lecture Outline Review Go over Exam #1 Continue production economic theory Slide 3 Maximizing Profit Using the previous example, let’s now solve…

Producer Behavior Copyright © 2013 Worth Publishers, All Rights Reserved  Microeconomics  Goolsbee/Levitt/ Syverson 1/e 6 Chapter outline 6.1 The Basics of Production…