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1、TheCostsofProduction1©2012CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.KeyConceptsontheProducerTotalrevenueAmount
2、afirmreceivesforthesaleofitsoutputTotalcostMarketvalueoftheinputsafirmusesinproductionProfitTotalrevenueminustotalcost2©2012CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorservic
3、eorotherwiseonapassword-protectedwebsiteforclassroomuse.WhatareCosts?CostsasopportunitycostsThecostofsomethingiswhatyougiveuptogetitFirm’scostofproductionIncludealltheopportunitycostsofproducingitsoutputofgoodsorservicesExplicitcostsImplicitcosts3©2012CengageLearning.AllRightsRese
4、rved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.WhatareCosts?ExplicitcostsInputcoststhatrequireanoutlayofmoneybythefirmImplicitcostsInputcoststha
5、tdonotrequireanoutlayofmoneybythefirmIgnoredbyaccountantsTotalcosts=Explicitcosts+Implicitcosts4©2012CengageLearning.AllRightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword
6、-protectedwebsiteforclassroomuse.WhatareCosts?ThecostofcapitalasanopportunitycostKeyexampleofImplicitcost:OpportunitycostoffinancialcapitalinvestedinthebusinessInterestincomenotearnedonfinancialcapitalSavingvs.InvestedinbusinessNotshownascostbyanaccountant5©2012CengageLearning.All
7、RightsReserved.Maynotbecopied,scanned,orduplicated,inwholeorinpart,exceptforuseaspermittedinalicensedistributedwithacertainproductorserviceorotherwiseonapassword-protectedwebsiteforclassroomuse.WhatareCosts?EconomicprofitTotalrevenueminustotalcostTotalcostsincludesbothexplicitandi
8、mplicitcostsAccountingprofitTotal