READINGS FOR TOPIC 5: Production and Costs
Required Readings:
- Hall & Lieberman, Chapter 6
- The Wall Street Journal
STUDY QUESTIONS FOR TOPIC 5:
- What is the difference between explicit and implicit cost?
- What is the difference between accounting and economic profit?
- What is the difference between fixed and variable factors of production?
- What is the long run? What is the short run?
- What is the difference between marginal and average productivity?
- Explain the Law of Diminishing Marginal Productivity. What accounts for it?
- Compare and contrast fixed, variable, marginal, and average costs.
- What is the marginal/average rule?
- How do costs in the short run compare with costs in the long run?
- What are economies of scale?
