price of the product times the quantity of output sold:

We will see in the following chapters that revenue is a function of the demand for the firm’s products.

Total cost is what the firm pays for producing and selling its products. Recall that production involves the firm

converting inputs to outputs. Each of those inputs has a cost to the firm. The sum of all those costs is total cost.

We will learn in this chapter that short run costs are different from long run costs.

We can distinguish between two types of cost: explicit and implicit. Explicit costs are out-of-pocket costs, that

is, actual payments. Wages that a firm pays its employees or rent that a firm pays for its office are explicit costs.

Implicit costs are more subtle, but just as important. They represent the opportunity cost of using resources

that the firm already owns. Often for small businesses, they are resources that the owners contribute. For
{"creationdate": "2022-12-07T14:15:44-06:00", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creator": "PDFMiner", "file_name": "Microeconomics3e.pdf", "file_size_mb": 26.99, "producer": "Prince 14.2 (www.princexml.com)", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "batch_uploader", "moddate": "2022-12-07T14:23:05-06:00", "total_pages": 597, "file_type": ".pdf", "title": "Principles of Microeconomics 3e", "batch_upload": true, "upload_timestamp": "2026-02-07T15:37:44.339247"}