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Module 6 Microeconomics

This course guide provides an overview of the 10th week of a Basic Microeconomics course, focusing on the theory of cost and profit, including key terms like assets, costs, and revenues; the relationship between total, fixed, and variable costs; and cost-output graphs illustrating average and marginal costs. The reading materials and assessment tasks are also outlined.

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Micmic DTorres
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142 views3 pages

Module 6 Microeconomics

This course guide provides an overview of the 10th week of a Basic Microeconomics course, focusing on the theory of cost and profit, including key terms like assets, costs, and revenues; the relationship between total, fixed, and variable costs; and cost-output graphs illustrating average and marginal costs. The reading materials and assessment tasks are also outlined.

Uploaded by

Micmic DTorres
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NPC ON LINE COURSE GUIDE FOR A.Y.

2021-2022

COURSE TITLE: BASIC MICROECONOMICS


COURSE CODE: BACC 1
PRE-REQUISITE: APPLIED ECONOMICS
NAME OF FACULTY: PROF.FLORENTINA C. TAYCO
MODULE NUMBER: 1 OF 10
LESSON TITLE/TOPIC: CHAPTER 6 THE THEORY OF COST AND PROFIT
WEEK NUMBER : 8
INTENDED LEARNING OUTCOMES:
-the subject provides an insight to our student on how to compute profit.
LEARNING AND TEACHINF SUPPORT MATERIAL:
Graphs and illustration
Lecture discussion
Summary and concept
Power point
LECTURE PROPER AND DISCUSSION:
CHAPTER V1- THE THEORY OF COST AND PROFIT
TERMS TO REMEMBER:
ASSETS- a resource that has economic value owned by individual or a company.
COST- value of money that has been used up to produce something.
ENTREPRENEUR- one who introduces new things and uses this innovations for the betterment of the
economy.
IMPUTED COST - cost that is implied but not included in financial report or accounting record.
INVENTORIES- a detailed list or report in one’s possession.
OPPORTUNITY COST- deals on how much more(less) one gains in giving up alternatives to benefit from
a choice.
REVENUES- also known as income; total amount received by the company for the goods or service sold.

COST CONCEPTS
-a firm maintain a stock of assets that it can use for production.
Two CLASSES OF ASSETS;
1. REAL ASSETS- machineries, buildings , materials, and supplies.
2. MONETARY ASSETS- forms of money and near money, part of which the firms transforms into
real assets through purchases or acquisitions.
INVENTORIES
-the resources used are simply transformed into these unsold goods which become part of the
firm’s stock of assets. Depletion of monetary assets only constitutes cost when used as payments for the
utilization of other resources such as labor, other obligations of the firms, such as other forms of taxes.
IMPUTED COST
-a separate entity as it rewards its stakeholders, it should pay any use of resources and other
assets to determine gains(losses) even before making the best investment choice. Accounting records
exclude uses which involve no cash outlay which is cost example is the imputed salary of the
entrepreneur. Who doubles as the general manager of the business.
TOTAL COST
-HAS TWO BASIC COMPONENTS
1. TOTAL FIXED COST-(TFC) –does not vary with output.
2. TOTAL VARIABLE COST (TVC)- varies in direct proportion. TC=TFC+TVC

COST –OUTPUT RELATIONSHIP IN THE SHORT RUN


Quantity TOTAL Total TOTAL AVERAG Average Average Marginal TOTAL Total
FIXED Variable COST E FIXED Variable Total Cost Revenue Profit
COST Cost (TC) COST Cost Cost (MC) when When
(TFC) (TVC) (AFC) (AVC) (ATC) Price is Price is
P9.5 P9.5
1 40 5 45 40 5 45 5 9.5 -35.5
2 40 8.5 48.5 20 4,25 24.25 3.5 19 -29.5
3 40 11 51 13.33 3.66 17 2.5 28.5 -22.5
4 40 14 53 10 3.25 13.25 2 38 -15
5 40 15 55 8 3 11 2 47.5 -7.5
6 40 17.5 57.5 6.67 2.92 9.58 2.5 57 -0.5
7 40 21 61 5.71 3 8.71 3.5 66.5 5.5
8 40 26 66 5 3.25 8.25 5 76 10
9 40 33 73 4.44 3.67 8.11 7 85.5 12.5
10 40 42.5 82.5 4 4.25 8.25 9.5 95 12.5
11 40 55 96 3.64 5 8.64 12.5 104.5 9.5
12 40 71 111 3.33 5.92 9.25 16 114 3
13 40 91 131 3.08 7 10.08 20 123.5 -7.5
14 40 115.5 155.5 2.86 8.25 11.11 24.5 133 -22.5
15 40 145 185 2.67 9.67 12.3 29.5 142.5 -42.5

THE AVERAGE COST FUNCTION

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
QUANTITY

ASSESSMENT TASKS
EXAMINATION AND EXERCISE

READING AND OTHER REFERENCES:


1. INTRODUCTORY MICROECONOMICS 3RD @ 4TH EDITION BY:PAGOSO,CRISTOBAL M. ET AL.
2. MICROECONOMICS SIMPLIFIED BY: AVILA-BATO, ET .AL.
3. MICROECONOMICS 5TH EDITION BY: PINDYNCK, ROBERT S. @ RUBINFELD, L.
PREPARED BY: PROF.FLORENTINA C. TAYCO, MAED
(COLLEGE OF EDUCATION)

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