Quiz 1

Is technology!
Function of the firm: to turn inputs into outputs
Objective of the firm: To make profit!

...is residual interest! (what money is left).

When there is an agent inside the firm who starts to think they are the principal when they aren't (owner).

Is a personally guaranteed bank loan which means if you fail to pay the loan then they can take your personal property.

-Short term (1 year or less). All variables are up for change except real estate
-Long term (over 1 year). All variables are up in the air

Fixed costs and variable costs = total costs

"Costs incurred before 1 unit of production"

Costs incurred ""during the production of

Profit = (Price - ATC) x Qty

Total fixed costs / production output. Represents fixed costs per unit of output

Total variable costs per unit of output. Total variable costs / quantity of output

change in costs / change in quantity. Additional costs incurred from producing one more unit

Additional revenue generated from selling one more unit

Additional output that you get when you hire one more worker

Profit = total revenue - total expenses

Represents the price at which consumers are willing and able to purchase

Indicates profit maximization.

Things you pay cash for (money)

Costs incurred by you that are "unspoken". ex. time. Always found "down in the corner" in owner's equity

sales - explicit costs

sales - explicit costs - implicit costs

Left side: Assets
right side: liabilities
Bottom right: Owner's equity (and agent steals from the S, G, A.... selling, general, and administrative expenses)