economic

Week 3 Key Topics Covered

• Costs and profit

o How do costs of production and price levels affect sales and profitability? o How much to produce?

• Total product and Marginal product

• Profitability: Role of Revenues and Costs

• Maximum Profit at output where Marginal Revenue (MR)= Marginal Cost (MC)

• What if losses are made? Short run and Long

• Short run: Diminishing marginal returns

• Long run: Economies and dis-economies of Scale

• Minimum Efficient Scale (and impact on incentives for businesses to grow in the long run)

Required readings: Sloman et al, 8th edition (2019)

— Chapters: 9 (including Boxes 9.2, 9.3 and 9.4) — Chapter 10 (including Boxes 10.1 and 10.3)