WGU D489 TASK 1 FINAL PAPER
QUESTIONS AND SOLUTIONS
◉ Implicit Cost
Answer: The opportunity cost of resources already owned by the
firm and used in business, for example, expanding a factory onto
land already owned.
◉ Explicit Cost
Answer: Money a firm must pay out to settle its Bill's and pay its
employees.
◉ Accounting Profit
Answer: Total revenues - Explicit costs
Includes appreciation.
◉ Economic Profit
Answer: Total Revenue - (Explicit Cost + Implicit Cost)
◉ Variable Costs
Answer: Cost that do change with the level of output
,◉ Law of Diminishing Marginal Returns
Answer: The decrease in the marginal output of a production
process as the amount of a single factor of production is
incrementally increased, while the amount of all other factors of
production stay constant.
◉ Fixed Costs
Answer: Costs that do not change with the quantity of output
produced.
◉ Production Technologies
Answer: Alternative methods of combining inputs to produce
outputs.
◉ Long Run Average Cost Curve
Answer: The lowest possible average cost of production, allowing
all the inputs to production to vary so that the firm is choosing its
production technology.
◉ SRAC Curves
Answer: The average total cost curve in the short term. it shows
the total of the average fixed costs and the average variable costs.
◉ Economies of Scale
Answer: A proportionate saving in costs gained by an increased
level of production.
, ◉ Constant Returns to Scale
Answer: When an increase in inputs causes the same proportional
increase in output. Expanding all inputs proportionally does not
change the average cost of production.
◉ Diseconomies of Scale
Answer: Features that lead to an increase in average costs as a
business grows beyond a certain size. The long run average cost of
producing each individual unit increases as total output increases.
◉ Perfectly Competitive
Answer: A type of market with many consumers and producers,
all of whom are price takers because they sell identical products.
- Price Takers
- Easy entry and exit
- No long run economic profit.
◉ Monopolistic Competition
Answer: A type of market with multiple firms selling
differentiated products in a market with a low barrier to entry.
-Highly Substitutable
- Differentiated by branding
QUESTIONS AND SOLUTIONS
◉ Implicit Cost
Answer: The opportunity cost of resources already owned by the
firm and used in business, for example, expanding a factory onto
land already owned.
◉ Explicit Cost
Answer: Money a firm must pay out to settle its Bill's and pay its
employees.
◉ Accounting Profit
Answer: Total revenues - Explicit costs
Includes appreciation.
◉ Economic Profit
Answer: Total Revenue - (Explicit Cost + Implicit Cost)
◉ Variable Costs
Answer: Cost that do change with the level of output
,◉ Law of Diminishing Marginal Returns
Answer: The decrease in the marginal output of a production
process as the amount of a single factor of production is
incrementally increased, while the amount of all other factors of
production stay constant.
◉ Fixed Costs
Answer: Costs that do not change with the quantity of output
produced.
◉ Production Technologies
Answer: Alternative methods of combining inputs to produce
outputs.
◉ Long Run Average Cost Curve
Answer: The lowest possible average cost of production, allowing
all the inputs to production to vary so that the firm is choosing its
production technology.
◉ SRAC Curves
Answer: The average total cost curve in the short term. it shows
the total of the average fixed costs and the average variable costs.
◉ Economies of Scale
Answer: A proportionate saving in costs gained by an increased
level of production.
, ◉ Constant Returns to Scale
Answer: When an increase in inputs causes the same proportional
increase in output. Expanding all inputs proportionally does not
change the average cost of production.
◉ Diseconomies of Scale
Answer: Features that lead to an increase in average costs as a
business grows beyond a certain size. The long run average cost of
producing each individual unit increases as total output increases.
◉ Perfectly Competitive
Answer: A type of market with many consumers and producers,
all of whom are price takers because they sell identical products.
- Price Takers
- Easy entry and exit
- No long run economic profit.
◉ Monopolistic Competition
Answer: A type of market with multiple firms selling
differentiated products in a market with a low barrier to entry.
-Highly Substitutable
- Differentiated by branding
