Accounting Costs vs Economic Costs
· Microeconomics OpenStax Textbook , Chapter 7
· Video: Accounting Costs vs Economic Costs (3:50) – in this video, explicit and implicit costs and revenues are defined. The importance of opportunity costs and economic profits are examined.
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· Video: Short Run vs Long Run Production (1:21) – this video explains the difference between the short run and the long run in economics.
· Video: Producer Theory, Profits (5:06) – in this video, production is examined, including increasing, constant and decreasing returns to scale.
· Video: Fixed and Variable Costs (4:34) – the concepts of fixed and variable costs are introduced in this video.
· Video: Cost Curves (5:12) – in this video, the relationship between production levels and costs is analyzed. The full range of cost curves is introduced and explained.
· Lesson: Production Decisions and Economic Profit – this fairly large set of videos walks through the various costs concepts and the profit maximizing output decision of a firm in both the short and the long run.
· Video: Do We Really Need All Those Diagrams? (5:59) – this video explores the connections between production processes, costs, price and profits.
· Article: Pizzanomics – in this article, the costs, revenues and profit in two real pizza joints are presented.
For this assignment, you will compare the characteristics of two important healthcare products – insulin and aspirin. Answer the following questions (roughly 2 pages total, not including any graphs you might include). Please number each answer to coordinate with the appropriate question. Submit your answers in a Word document once complete.
This paper should be 2 pages, double-spaced, 12 pt Times New Roman font, 1-inch margins with APA citation format. You are to use your course texts, It should be well written and organized, include a reference list when appropriate (in APA format
1. Provide a short description of each product.
2. How would you describe the demand for each product? Is demand elastic/inelastic? Is it a necessity/luxury? Does it have complements / substitutes?
3. For each product, identify one factor that might shift demand for the product. Explain briefly how the factor influences demand for the product.
4. For each product, identify at least one fixed cost of production. Explain why it is considered a fixed cost.
5. For each product, identify at least one variable cost of production. Explain why it is considered a variable cost.
6. For each product, identify one factor that might shift the supply of this product? Explain briefly how this factor influences supply of the product.