AP Micro Problem Set 3 Production Costs and Perfect Competition(2007-2008)-1 (1).pdf - 1/20 2/20 3/20 4/30 5/10 Total/100 Name Costs of Production and

AP Micro Problem Set 3 Production Costs and Perfect Competition(2007-2008)-1 (1).pdf

This preview shows page 1 - 2 out of 3 pages.

Name: _________________________ Costs of Production and Perfect Competition Problem Set #4a 1. Explain an example that demonstrates the “real world” application of each of the following. Define the terms in your own words and use examples that clearly demonstrate your understanding of each concept. a. Explicit and Implicit Costs (____/5) 1. Explicit costs are things that are paid by firms for using resources. These include things like salaries, materials, and rent, and could be seen as money going out with other goods coming in. Implicit costs are opportunity costs paid by firms for making choices. These include things like wages or time that could be used by producing something else or working somewhere else. b. The Law of Diminishing Marginal Returns (____/5) 1. This is the idea that as variable resources are added, the additional output produced from each new worker will eventually fall. This is because eventually workers will get in each other’s way, there is no room for extra machines, and productivity falls when businesses expand too much because people have less incentive to work hard. c. Fixed Costs, Variable Costs, and Total Cost (____/5) 1. Fixed costs are costs for resources that don’t change based on output and include things like rent and salaries. Variable costs are costs that change when output changes and include
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '17
  • Roger Crispy
  • Economics, Economics of production, tc

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes