Explanation Implicit costs refer to the opportunity cost of resources, which are owned by the firm. These costs would contribute to the opportunity cost of production, because the internal resources also have alternative uses, whereas, these costs do not state as explicitly because of the invisible transaction. The implicit costs of a firm include the rent on building and equipment owned by the firm, labor service of the owner, the rate of interest on equity capital, and so on...

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN: 9781305506725

Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher: Cengage Learning

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Explicit and Implicit Cost Analysis

The entire idea of the cost of production or production cost is applied corresponding or we can say that it is related to money cost. Money cost refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring fac…

Question

Chapter 21, Problem 16CQ

To determine

Implicit cost.

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Chapter 21, Problem 15CQ

Chapter 21, Problem 17CQ

Chapter 21 Solutions

Economics: Private and Public Choice (MindTap Course List)

Ch. 21 - Prob. 1CQ Ch. 21 - Prob. 2CQ Ch. 21 - Prob. 3CQ Ch. 21 - Prob. 4CQ Ch. 21 - Prob. 5CQ Ch. 21 - Prob. 6CQ Ch. 21 - Prob. 7CQ Ch. 21 - Prob. 8CQ Ch. 21 - Prob. 9CQ Ch. 21 - Prob. 10CQ

Ch. 21 - Prob. 11CQ Ch. 21 - Prob. 12CQ Ch. 21 - Prob. 13CQ Ch. 21 - Prob. 14CQ Ch. 21 - Prob. 15CQ Ch. 21 - Prob. 16CQ Ch. 21 - Prob. 17CQ Ch. 21 - Prob. 18CQ Ch. 21 - Prob. 19CQ

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What is a long-run average cost curve?
Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?
A common name for fixed cost is overhead. If you divide fixed cost by the quantity of output produced, you get average fixed cost. Supposed fixed cost is 1,000. What does the average fixed cost curve look like? Use your response to explain what spreading the overhead means.

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