What firm owners must give up to use resources to provide a good or service

Non-monetary opportunity costs of using owner-supplied resources

What are four types of implicit costs?

Pursuit of market share usually reduces profit; and maximizing total revenue reduces profit

Perfect Competition

Single firm, no close substitutes

Monopolistic Competition

Many firms, similar and differentiated products

Oligopoly

Few firms, similar or identical product

Examination of the additional benefits of an activity compared to the additional costs incurred by the same activity

Tells us the optimal level of activity, and if something is worthwhile

Change in total benefit caused by a change in the level of activity

Describe constrained optimization

When a function is to be minimized or maximized subject to constraints

Constant and must be paid no matter the output that is produced

Statistical technique for estimating the parameters of an equation and testing for statistical significance

Dependent Variable

Variable that effect the outcome of the dependent

How significant our results are (smaller the better)

Overall significance of the model (lower the better)

U shaped

Scientific predictions based on historical time-stamped data

Fixed amount must be used for a level of output

As we increase output, our average costs rise

Describe Constant Returns to Scale

Costs remain constant, so they are qual to average costs