Production decisions and economic profit

This course is a part of Microeconomics, a 7-course Topic series from Khan Academy.

Economic profit vs. accounting profit. Average total cost (ATC) and marginal cost (MC). Marginal product of labor (MPL). Price discrimination.

This course contains 6 segments:

Introduction to production and costs

When a firm produces output, it combines the factors of production to produce that output. In this lesson, learn about how we can represent the production process mathematically, and then use that process to generate the costs of production.

Production and costs in the short run

In this tutorial, Sal uses the example of an orange juice business to help us understand the ideas of average total cost (ATC), marginal cost (MC) and marginal revenue (MR). We then use this understanding to answer the age-old question, "how much orange juice should I produce?" Finally, we use these ideas to construct a long-run supply curve. A must watch if you're interested in making juice!

Production and costs in the long run

In this lesson, learn about the production costs in the long run. Topics include the long run average total cost curve, economies of scale, minimum efficient scale, and the relationship between minimum efficient scale and competition

Types of profit

Economic profit and accounting profit are two different things (the difference being that economic profit takes into account opportunity cost). Confused? This tutorial lays it all out with the example of a restaurant.

Profit maximization

In this lesson, we introduce a rule that a firm can use to maximize profits, as well as the intuition behind that rule.

Firm entry, exit, and the shut-down rule

Firms' decisions to enter or exit a market depends on whether or not a firm can make a profit. Learn about the conditions under which firms enter and exit markets, and when to shut down, in this lesson