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Intermediate Microeconomics


5. Costs


Economic cost includes both explicit and implicit costs. Put differently, economic cost measures opportunity cost. In these Pencasts, we cover the different ways costs are measured, short-run costs, long-run costs, how per-unit and lump-sum taxes affect firms' costs, cost minimization, and changes in factor prices. While examining a representative firm's costs is somewhat dry and technical, a thorough understanding of a firm's costs helps us to understand subsequent topics, such as perfect competition, monopoly, oligopoly, and monopolistic competition.


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Short-Run Cost Mesures

This Pencast defines different short-run cost measures, including variable cost, fixed cost, total cost, marginal cost, average variable cost, average fixed cost and average total cost. [Play Pencast]


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Short-Run Costs: An Application

This Pencast demonstrates how to determine marginal cost, average fixed cost, average variable cost and average total cost using a explicit cost function. [Play Pencast]


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Shapes of Cost Curves

This Pencast presents the shapes of difference cost curves, including the marginal cost, average variable cost, average fixed cost, and average total cost curves. [Play Pencast]


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Per-Unit Taxes and Cost Curves

This Pencast illustrates how a per-unit tax imposed on firms affects their cost curves. [Play Pencast]


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Lump-Sum Taxes and Cost Curves

This Pencast illustrates how a lump-sum tax imposed on firms affects their cost curves. [Play Pencast]


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Long-Run Costs

In this Pencast, we discuss long-run costs and how they differ from short-run costs. In addition, we define an isocost line and show how to plot an isocost line. [Play Pencast]


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Minimizing Costs

In this Pencast, we demonstrate how a firm minimizes its costs, given a particular level of output. In particular, we use the Lagrangian method to derive a condition for cost minimization. [Play Pencast]


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Maximizing Output

In this Pencast, we illustrate how a firm maximizes its output, given a particular level of costs. In particular, we use the Lagrangian method to derive a condition for output maximization. [Play Pencast]


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Factor Price Changes: Part I

In this Pencast, we demonstrate how to find the optimal combination of capital and labor for a given a production function, output level, and factor prices. [Play Pencast]


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Factor Price Changes: Part II

In this Pencast, we demonstrate how to find the optimal combination of capital and labor when factor prices change. [Play Pencast]


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Factor Price Changes: Part III

In this Pencast, use the information provided in the previous two pencast to illustrate graphically how a change in factor prices affects the optimal combination of capital and labor. [Play Pencast]


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