Ch 8 HW - Stephanie Chin Microeconomics Ch 8 Homework 1...

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Stephanie Chin Microeconomics Ch. 8 Homework 1. Explicit costs are expenditures paid with money for examples resources and services. Implicit costs are the opportunity costs of using the resources a company already owns. The explicit costs for attending college are tuition whereas implicit costs are housing, and food plan costs. Normal profit, or the minimum payment for our entrepreneurial efforts is based on the idea that there is cost for doing effort. 2. Total sales revenues= $72,000 – [$12,000 (helper) + $5000 (rent) + $20,000 (materials)]= $35,000 (accounting profit) – [$4,000 + $15,000 + $3,000]= $13,000 (economic profit) 3. Short Run vs. Long Run a. Short-run b. Long-run c. Short-run d. Long-run 4. The Marginal product curve represents the slope of the total product curve. Therefore as the total product increase by decreasing amounts the average product increase and first and then decreases. The law of diminishing returns says that as more units of a resource are added at a certain point, the marginal product declines. 5. Distinction between fixed and variable costs can be made in the short run because resources prices differ little in the short run. Fixed costs are the costs that a company has to pay with or without production whereas the variable costs are the costs the company pays with an increase or decrease in production. “There are no fixed costs in the long run” because fixed costs, over time, also change.
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