up and operating a firm must be included as a part of the cost of pro- 

 duction. This quantity of income will bear a close relation to the income 

 he can receive in alternative pursuits. Thus, the entrepreneurial income 

 is an opportunity cost to the firm. 



The entrepreneur in his planning activities must determine how 

 costs of each of the alternative firm sizes compare with those of other 

 sizes in providing him with his required income. To indicate the effect 

 of entrepreneurial income on the long-run costs of broiler assembly and 

 processing, two entrepreneurial income levels, $20,000 and $50,000 per 

 year, were arbitrarily selected and costs determined as shown in Table 8. 

 in Figure 12 the change in the level and slope of the long-run cost curve 

 at the 5,000 pound density level is shown for these two levels of entre- 

 preneurial income. The entrepreneurial income is handled here as an 

 addition to all other costs of the firm, and adds a fixed cost item to the 

 long-run average cost curve. Treating entrepreneurial income as a con- 

 stant, independent of all other anticipated costs along the planning 

 curve, makes the planning curve more useful. 



Figure 12. Effects of Several Levels of Entrepreneurial Income Payments 



on the Long-run Average Combined Costs of Broiler Assembly 



and Processing, 5,000 Pound Density Level. 



5.8- 



5.6 

 5.4 

 5.2 



^ 4.21- 



V) 



o 



O 4.0 



3.8 



3.6 



3.4 



nX. 



Key: 



Entrepreneur income 



$50,000 



$20,000 



None 



10 20 



Firm size 



30 40 50 60 



pounds per year (1,000,000) 



J" 



70 



35 



