Principles of Microeconomic

Running head: ECONOMICS
Economics
Name of the Student
Name of the University
Course ID

ECONOMICS1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................2
Question 3........................................................................................................................................3
Question 4........................................................................................................................................4
Question 5........................................................................................................................................5
Question 6........................................................................................................................................6
Question 7........................................................................................................................................6
References........................................................................................................................................8

ECONOMICS2
Question 1
a)
Explicit costs refer to the cost incurred by the company to pay for using the factors of
production. It involves direct outflow of cash. Implicit costs in contrast refer to the opportunity
cost for carrying out the business. It may be the cost of resources belong to the owner such as
land, capital or inventory. This kind of cost does not require outflow of cash (Fine 2016).
Because of the inherent difference between explicit and implicit cost it is important to
differentiate between explicit or implicit cost.
b)
Explicit cost: Costs involve direct outflow of cash.
Explicit cost: Cost on fuel is part of factors used in production process.
Explicit cost: Monetary cost made out of business.
Explicit cost: Salaries on executive is the direct input cost and hence is counted as explicit cost.
Question 2
a)
Table 1: Relation between Marginal Product and Marginal Cost of the business