Homework
Economics B200
Dr. Walker

1.  Explain the difference between explicit and implicit costs. (4 pts.)
 
 
 
 
 

2.  Use the table to answer the following questions: (3 pts.)

            a.  What is the average total cost of producing 3 units of output?

            b.  What is the total cost of producing 5 units of output?

            c.  What is the marginal cost of producing the fourth unit?
 

Units of Output     Total Fixed Cost      Total Variable Cost

1                             $1000                             $300

2                               1000                              550

3                               1000                              900

4                               1000                             1400

5                               1000                             2050

 3. Explain why a zero economic profit is a positive accounting profit. (4 pts.)
 
 
 
 

4. With which input (below) does diminishing marginal returns set in? (2 pts.)

Input        Total Product (# of units per hour)

1.                    10
2.                    40
3.                    80
4.                    125
5.                    180
6.                    210
7.                    220
8.                    205

5.  Should you employ (or use) the 7th input if the MC of employing it is $10/hour and each unit is sold in the market for $1.00?  Explain your answer.  (4 pts.)
 
 
 

6.  Given the same information as in question number 5, should you employ the 8th input?  Explain. (3 pts.)