A. Producer theory:

Discussing phone companies; Mobilicity, Wind and T-Mobile to discuss how some companies original goal is not to maximize profits at first but rather attract as many customers as they can or establish their firm

He mentions T & T Asian supermarket who recently sold their company to Loblaws; initial investment minus the amount they made when sold

Types of profit

Profit = TR (total revenue) - cost

Accounting profit = TR - accounting cost

Accounting cost bought in the market

Economic profit = TR - opportunity cost

Opportunity cost (input cost) owned by the firm; supplied by the owner

Depreciation

Foregone interest

Foregone wage

Normal profit; other industries can yield

Opportunity cost > accounting cost

Economic profit < accounting profit

Firm’s Constraint

Technology constraints

Information constraints

Market constraints