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21001 Microeconomics Production Sharif University of Technology

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Sharif University of Technology

21001 Microeconomics Production Sharif University of Technology

To determine the optimal level of
output and the input combinations, we
must convert from the unit
measurements of the production
technology to dollar measurements or
costs. Accounting Cost Actual expenses plus depreciation
charges for capital equipment
Economic Cost
Cost to a firm of utilizing economic
resources in production, including
opportunity cost Northwestern University Law School
3) Choosing a Site
Land owned in Chicago
Must purchase land in Evanston
Chicago location might appear
cheaper without considering the
opportunity cost of the downtown land
(i.e. what it could be sold for) Northwestern University Law School
3) Choosing a Site
Chicago location chosen–very costly
Justified only if there is some intrinsic
values associated with being in
Chicago
If not, it was an inefficient decision if it
was based on the assumption that the
downtown land was “free”

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21001 Microeconomics Production Sharif University of Technology

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