Production and Cost

1. The Motivation of Firms

   1. Profit

      1. Total Revenue

      2. Total Cost

         1. Explicit

         2. Implicit

   2. Accounting Profit

   3. Economic Profit

2. Production

   1. Capital

   2. Labor

   3. Time

      1. Short Run

         1. Fixed Inputs

         2. Variable Inputs

      2. Long Run

3. Short Run Production

   1. Total Product

   2. Average Product

   3. Marginal Product

   4. The Law of Diminishing Marginal Returns

4. Short Run Costs

   1. Total Cost = Fixed Cost + Variable Costs

   2. ATC = Total Cost / Q

   3. ATC = AFC + AVC

   4. Marginal Cost

5. Long Run Production and Cost

   1. All inputs are variable

   2. All costs are variable

   3. Returns to Scale

      1. Increasing

      2. Decreasing