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Class, there are about 30 million businesses in the United States. Of which more than 25 million are small businesses. All businesses are profit maximizers.
Profit = Total Revenue - Total Cost.
As you can see, cost is a major component firms consider in maximizing their profit.
Costs are divided in to two parts: FIXED COSTS and VARIABLE COSTS.
To start with, what is your understanding of ACCOUNTING COST, ECONOMIC COST, FIXED COST, VARIABLE COST? Please provide examples. Why is it important for a business to identify its cost as fixed or variable?
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If Kenya is better at producing tea and wool than Lesotho, then Kenya is better off not trading with Lesotho.
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