economic vs. accounting cost short-run vs. long-run decisions opportunity cost 8 behind the supply...
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![Page 1: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/1.jpg)
Economic vs.Accounting Cost
Short-Run vs.Long-Run Decisions
Opportunity Cost
8 Behind the Supply Curve:Inputs and Costs
![Page 2: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/2.jpg)
Total Product Curve
Number of Workers
Outp
ut
per
min
ute
2 4 6 8 10
50
100
150
200
250
300
350
400
Increasing productivity:
specialization
Decreasing productivity: diminishing
returns
![Page 3: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/3.jpg)
1 2 3 4 5 6 7
No. of workers
Marg
inal Pro
du
ct
10
20
30
40
50
60
70
80
90
1
2
3
0
4
0
65
150
220
270
TotalProduct
MarginalProduct
5 295
Marginal Product Curve
![Page 4: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/4.jpg)
0
65
150
220
270
Output
0
1
2
3
4
Labor
$15
$15
$15
$15
$15
FixedCost
IngredCost
LaborCost
295 5 $15
TotalCost
Total Cost Curve
2¢/cookie$7/hour
![Page 5: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/5.jpg)
0
65
150
220
270
Output
295
TotalCost
$15.00
$23.30
$32.00
$40.40
$48.40
$55.90Number of cookies
Cost
($)
80 160 240 320 400
10
20
30
40
50
60
70
80
Total Cost Curve
![Page 6: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/6.jpg)
Number of cookies
Cost
($)
80 160 240 320 400
10
20
30
40
50
60
70
80
Short-Run Total Cost Curve
Diminishing returns:costs increase more
rapidly
Fixed cost
Variable cost
Total cost
![Page 7: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/7.jpg)
Output
Cost
($
)
2 4 6 8 10
20
40
60
80
100
120
140
160Total cost
Calculating Average (AC) & Marginal (MC) Cost
4448
84
101
2 Units
MC =
AC =
8 Units
MC =
AC =
![Page 8: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/8.jpg)
0
65
150
220
270
Output ATC AVC MC
295
TotalCost
$15.00
$23.30
$32.00
$40.40
$48.40
$55.90
Marginal and Average Costs
![Page 9: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/9.jpg)
Cookies
Aver
/ M
arg
Cost
($
)
80 160 240 320 400
.10
.12
.14
.16
.18
.20
.22
.24
.26
.28
.30
Marginal and Average Cost Curves
![Page 10: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/10.jpg)
160 320 480 640 800 960
.10
.20
.30
.40
ATC(2 ovens)
ATC(4 ovens)
ATC(6 ovens) ATC
(8 ovens)
Short-run and Long-run Average Costs In the long run, the firm can adjust capacity.
![Page 11: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/11.jpg)
Output
Cost
($
)
4 8 12 16 20
5
10
15
20
25
30
35
40
Short-run and Long-run Average Costs
Indivisible inputs:
minimum level of fixed costs.
Economies of scale• specialization
• indivisible inputs• more productive
equip.• buying power
Minimum efficient
scale
![Page 12: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/12.jpg)
Long-Run Cost Curves: Military Hospitals
Inpatient Units
$0
$100
$200
$300
$400
$500
$600
$700
0 10,000 20,000
Admissions
Cos
t per
Adm
![Page 13: Economic vs. Accounting Cost Short-Run vs. Long-Run Decisions Opportunity Cost 8 Behind the Supply Curve: Inputs and Costs](https://reader030.vdocuments.us/reader030/viewer/2022032521/56649d5e5503460f94a3d19a/html5/thumbnails/13.jpg)
Ancillary Services
$0
$2
$4
$6
$8
$10
$12
$14
0 500,000 1,000,000
Outpatient Visits
Cos
t per
Vis
it
Pharmacy 47%
Anesthesiology14%
Pathology 14%
Radiology 10%
Intensive Care 6%