![]() Factor payments are what the firm pays for the use of the factors of production. Let’s move to the second factor we need to determine.įor every factor of production (or input), there is an associated factor payment. ![]() However, if we think about that backwards, it tells us how many inputs the firm needs to produce a given quantity of output, which is the first thing we need to determine total cost. The firm’s production function tells us how much output the firm will produce with given amounts of inputs. We’ve explained that a firm’s total costs depend on the quantities of inputs the firm uses to produce its output and the cost of those inputs to the firm. Evaluate patterns of costs to determine potential profit.Analyze short-run costs in terms of total cost, fixed cost, variable cost, marginal cost, and average cost.Understand that every factor of production has a corresponding factor price.Understand the relationship between production and costs.By the end of this section, you will be able to:
0 Comments
Leave a Reply. |