This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Ch. 20 Essays 1. Explain the meaning of the opportunity cost of producing a product and the difference between an explicit cost and an implicit cost. How would you determine the implicit money cost of a resource? a. The opportunity cost of producing a product is the value or worth the resource would have in its best alternative use. The statement, there is no such thing as a free lunch demonstrates opportunity cost. An explicit cost is the monetary payments it makes to those who supply labor, materials, fuel, transportation services and other services. Implicit costs are the opportunity costs of using its self-owned, self-employed resources. 2. What is the difference between normal profit and economic profit? Why is the former an economic cost? How do you define accounting profit?...
View Full Document