SCOPA MOD 52-54 - Microeconomics PDF

SCOPA MOD 52-54 - MICRO ECONOMICS NEW MATERIAL: Module 52 1. Explicit Costs - costs that require an outlay of money 2. Implicit Costs - costs that are not tangible in terms of money, think (opportunity costs); benefits forgone is another way to define it 3. Accounting profit: Revenue -...

SCOPA MOD 52-54 - MICRO ECONOMICS NEW MATERIAL: Module 52 1. Explicit Costs - costs that require an outlay of money 2. Implicit Costs - costs that are not tangible in terms of money, think (opportunity costs); benefits forgone is another way to define it 3. Accounting profit: Revenue - explicit costs only 4. Economic profit: Revenue - implicit and explicit costs 5. Normal Profit: When economic profit equals zero Module 53 1. Total Revenue = Price x Quantity 2. Profit is maximized when Total Revenue - Total Cost is at its highest 3. Profit is maximized when Marginal Revenue = Marginal Cost OR the last unit where Marginal Revenue exceeds Marginal Cost when using marginal analysis 4. Marginal Analysis always states that the marginal benefit must equal or exceed the marginal cost 5. Marginal Revenue is the additional revenue received by selling one more unit; marginal revenue can be determined by the change in total revenue from one unit to the next 6. Marginal Cost is the additional cost of producing an additional unit to sell; marginal cost can be determined by the change in total cost from unit to the next 7. Pg. 517 - Figure 53.1; Take note of the Marginal Revenue and Marginal Cost curves; MR is a straight horizontal line when price is constant; MC curves down at first, and then hooks upward for its remainder 8. Where the MR and MC curve intersect, represents the profit maximizing output level; in the figure 5 bushels of tomatoes should be produced to maximize profit 9. In economics, we assume that all cost curves include both implicit and explicit costs, so we use them to determine economic profit, not accounting profit Module 54 1. Production function: the relationship between the quantity of inputs that are needed to produce a certain number of outputs 2. Fixed input - an input that does not change for a period of time 3. Variable input - an input that can change at any time 4. Long run - the time period in which all inputs are variable 5. Short run - the time period in which at least one input is fixed 6. Total Product Curve is at first increasing at a decreasing rate, then reaches its maximum, then decreases 7. Marginal Product is the number of additional units of output created by an increase of one input (Production Function) 8. Example: Marginal Product of Labor - the addition of one unit of labor, leads to some number of increased outputs; 1 new worker, 10 additional units of output to sell 9. Marginal Product = Change in Quantity of Output/Change in Quantity of Labor 10. All inputs experience diminishing returns; each additional unit of an input leads to less output than the previous unit ASSESSMENTS: 1. Tackle the AP Test: Multiple Choice Module 52-54 2. Tackle the AP Test: FRQ Module 52-54 3. Module 52-54 Worksheets in google classroom