Implicit costs are defined by economists as nonmonetary opportunity costs. Why is it important for a firm to take these costs into consideration when evaluating a potential activity, when they don’t involve any monetary expense?
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- What is a sunk cost? Provide an example of a sunk cost other than one from this book. Why are such costs irrelevant in making decisions about future actions?Explain what a sunk cost is, what an opportunity cost is, and how each cost should be handled when doing project analysis. Give an example of each type of cost. (Answer the question correctly and in-depth.)Explain Implicit and Explicit cost with the help of suitable example?
- Explain why economic costs include both explicit (revealed and expressed) costs and implicit (present but not obvious) costs.You have been invited by friends to fly to Germany for October fest next year. For international travel, you apply for a passport that costs $97 and is valid for 10 years. After you receive your passport, your travel companions decide to cancel the trip because of “insufficient funds.” You decide to also cancel your travel plans because traveling alone is no fun. Is your passport expense a sunk cost or an opportunity cost? Explain your answer.Which of the following is an example of an implicit cost associated with an action? - the cost of materials in undertaking a new renovation on your home -the hourly wage you could be earning instead of enjoying your leisure time -the tuition fee that a student pays for a term of college -the time a parent can't spend with their children because they are working there could be more then one correct choice
- When thinking about cost analysis in Microeconomics, what are the real-world problems that occur when applying theories of scale? Describe and give an example of each.What is sunk cost? Provide an example of sunk cost other than one from the book and explain it. Why are such cost irrelevant in making decisions about future actions?Introduction to Calculus in Economics (continued): In the previous Problem Set question, we started looking at the cost function C (æ), the cost of a firm producing z items. An important microeconomics concept is the marginal cost, defined in (non- mathematical introductory) economics as the cost of producing one additional item. If the current production level is æ items with cost C (z), then the cost of computing h additionial (C(z+h)-C(z)) items is C (z + h). The average cost of those h items is . As we analyze the cost of just the last item produced, this can be made into a mathematical model by taking the limit as h → 0, i.e. the derivative C' (z). Use this function in the model below for the Marginal Cost function MC (x). Problem Set question: The cost, in dollars, of producing z units of a certain item is given by C (z) = 0.02a3 – 10z + 450. (a) Find the marginal cost function. MC (z) (b) Find the marginal cost when 50 units of the item are produced. The marginal cost when 50…
- What is sunk cost? Provide an example of a sunk cost. Why are such costs irrelevant in making decision about future actions?Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. Your aunt’s opportunity costs comprise *the accounting costs.the accounting costs and the implicit costs.all economic costs.none of the above Referring to the problem above: The implicit cost/s that your aunt can incur is/are: *foregone rental value, foregone interest income, foregone wages.foregone rental value and foregone wagesforegone interest income and foregone wagesforegone wages.Introduction to Calculus in Economics: Calculus is a powerful tool used in economics. One of the initial applications areas is the study of a firm, a topic in microeconomics. An important function is the cost function function C(x), the cost of producing items (of whatever they are selling). This question deals with just the cost function C'(x). Problem Set question: The cost, in dollars, of producing a units of a certain item is given by C(x) = 10x10√x - 8. Find the production level that minimizes the average cost per unit. The number of units that minimizes the average cost is Number
