Questions for Revieu of cost not 1. EXPLICIT AND IMPLICIT COSTs and variable cos
ID: 1124912 • Letter: Q
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Questions for Revieu of cost not 1. EXPLICIT AND IMPLICIT COSTs and variable cost? Does each t mos McCoy is currently rais 7. MARGINAL COST What is the diff ing corn on his 100-acre farm and earning an of S100 per acre. Howeves, if he raised soybeans, or why not? ExPLICIT AND IMPLICIT CoSTS following is an explicit cost or an implicit cost: a. Payments for labor purchased in the labor market b. A firm's use of a warchouse that it owns and co earning an accounting profit Why the marginal product ing an economic profit? Why If no, explain why each does or does ch affec 8. MARGINAL COST Explain wh n must increase if the marginal of 2. hot? e currently ars, he could earn marginal cost? If yes, explainw Determine w whether each of the resource is decreasing. S IN THE SHORT RUN What effect would Cowing have on a firm's short run margwu 9. COST cost fixed cost curve? a. An increase in the wage rate b. A decrease in property taxes c. A rise in the purchase price of new capital d. A rise in energy prices rent to another firm t paid for the use of a warchouse not owned by the firm The wages that owners could earn if they did not work for d. themselves 3. ALTERNATIVE MEASURES OF PROFIT Calculate the accounting proht or loss as well as the economic profit or loss in each of the following situations: 10. CoSTS IN THE SHORT RUN Identify each of th following graph: a. A firm with total revenues of $150 million, explicit costs of rm with total revenues of $125 million, explicit costs of c. A firm with total revenues of $100 million, explicit costs of irm with total revenues of $250,000, explicit costs of 4. ALTERNATIVE MEASURES OF PROFIT Why is it reasonable to . SHORT RUN VERSUS LONG RUN What distinguishes a firm's $90 million, and implicit costs of $40 million S100 million, and implicit costs of $30 million $90 million, and implicit costs of $20 million $275,000, and implicit costs of $50,000 b. A fi d. A think of normal profit as a type of cost to the firm short-run period from its long-run period? 6. LAW oF DIMINISHING MARGINAL RETURNS As a farmer, you must decide how many times during the year to plant a new crop. Also, you must decide how far apart to space the plants. Will diminishing returns be a factor in your decision making? If so, how will it affect your decisions?Explanation / Answer
Answer 1 - Amos McCoy is currently earning loss by raising corn in 100 acre farm. McCoy earns $100 accounting profit by raising corn in the farmland. He could earn accounting profit of $200 by raising soybeans. Accounting profit is defined as total revenue minus explicit cost. It does not included implicit cost and opportunity cost. McCoy forgives $200 accounting profit as opportunity cost of raising corn on the farmland. Thus McCoy incurring economic loss = 200 - 100 = $100. This is the economic loss of McCoy.
Answer 2 - Determine whether each of the following is explicit or implicit cost.
(a) Payment for labor purchased in the labor market. This is explicit cost because is directly paid by the employer of the labor.
(b) A firm's use of a warehouse that it owns and could rent to another firm. This is implicit cost of the firm. The firm is using its own resources. If it hire those resource from the market then it must had to pay for those resource.
(c) Rent paid for the use of a warehouse which is not owned by the firm is explicit cost of the firm. This is paid directly to the owner of the warehouse.
(d) The wage that owner could earn if they did not work for themselves, this is implicit cost of the firm. If the firm hires labor for the same work as owner did then firm must have to pay them.
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