A Study on Opportunity,Total, and Marginal Costs - 869 Words

Opportunity costs, total costs and marginal costs What are opportunity costs? How do explicit and implicit costs relate to opportunity costs? Opportunity cost is the value of the best alternative that one gives up for the current choice or decision. It is an important concept in economics and is used for emphasizing the relationship between scarcity and choice. It is the cost sacrificed or foregone in any decision. These opportunity costs extend to all aspects of production and consumption. Two costs related to opportunity costs are explicit and implicit costs. Explicit costs is the direct monetary payment or expense that a producer incurs by choosing one option over another. For example, a firm incurs $1000 as wages for workers when it decides to produce steel pans instead of cast-iron pans and this $1000 is considered as the explicit opportunity cost for the production of steel pans. Implicit costs, on the other hand, are those that cannot be measured directly and do not involve any monetary payments. A good example is when someone chooses between working and staying at home for personal reasons. The implicit opportunity cost is the salary that is lost by not working and staying at home to pursue a passion.  If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve? The total cost curve (TC) is the cost of production for a companyShow MoreRelatedEcons1089 Words   |  5 PagesDo We Study Economics ï  ¶ People have to â€Å"Choose† â™ ¦ Resources are scarce. â™ ¦ There is No Such Thing as Free Lunch! ï  ¶ Economics: the science of Rational Choice â™ ¦ Rationality: the basic assumption â™ ¦ Rational Choice: Economic agents use all the information available to make decisions that most efficiently satisfy their needs and achieve stated objectives. â™ ¦ How do people make rational choice? This is the subject of Economics! Paul A. Samuelson’s definition of Economics ï  ¶ â€Å"Economics is the study of howRead MoreEssay on Chapter 1 Profits Managers And Markets 1 1201 Words   |  5 Pagesincentives – Understand markets – Recognize the time value of money – Use marginal analysis †¢ Learning managerial economics 1-2 Introduction Economics †¢ The science of making decisions in the presence of scarce resources. – Resources are anything used to produce a good or service, or achieve a goal. – Decisions are important because scarcity implies trade-offs. 1-3 Introduction Managerial Economics Defined †¢ The study of how to direct scarce resources in the way that most efficiently achievesRead MoreEconomics954 Words   |  4 PagesAND COST IN THE FIRM QUESTIONS FOR REVIEW 1. (Explicit and Implicit Costs) Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soy beans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not? a. No he is not. He could be earning $100 more per acre and gaining that in economic profit. 2. (Explicit and Implicit Costs) Determine whether each of the following is an explicit cost orRead MoreMicroeconomics Is The Branch Of Economics That Studies And Analyzes The Market Behavior Of Both Individual Firms Essay1384 Words   |  6 PagesMicroeconomics is the branch of economics that studies and analyzes the market behavior of both individual firms and consumers, that help to understand the decision-making process of those individuals. Microeconomics analyzes the relationships between both the buyers and sellers as it studies the factors that influence both parties. Microeconomics focuses on the supply and demand of products and how small businesses price those items. Macroeconomics, however, focuses on the national’s economy asRead MoreCase Study : Monopoly Drugs Versus Generic Drugs1163 Words   |  5 PagesCase Study: Monopoly Drugs versus Generic Drugs Pharmaceutical Monopolies The importance of medical science innovation can hardly be overestimated and is reasonably appreciated by the government of most countries. As a result, when a pharmaceutical company creates a new drug it may apply for and be granted a patent that is a legal protection that shelters an invention from being used, copied, or traded without permission of the patent holder for a certain period of time (Schweitzer, 2007, p. 253)Read MoreThe Theoretical Basis Of Congestion Costs954 Words   |  4 PagesTheoretical basis of congestion costs (diseconomies) One by-product of agglomeration is congestion, which arise as economic agents compete for limited land, limited output markets, and limited fixed public infrastructure such as highways and communication facilities. Other negative consequences of agglomeration such as environmental pollution, noise, and high crime rates may also occur. In general, congestion externalities originate from the difference between private and social costs. The literature on optimalRead MoreIntroduction to Economics Exercise 11481 Words   |  6 Pagesthe study of households and firms and the interaction between these different economic actors. Macroeconomics, however, relates to the study of the economy as a whole, and in particular problems pertaining to growth, unemployment and inflation. Examples of microeconomic issues: 1. price ceilings/floors 2. positive/negative externalities 3. elasticity Examples of macroeconomic issues: 1. inflation 2. unemployment 3. economic growth (GDP) 3. Regarding the concept of Opportunity Cost, commentRead MoreEco/561 Business Proposal Essay examples1636 Words   |  7 Pagesquantity will be provided. Decisions will be made by using the concepts of marginal costs and marginal revenue to maximize profit. A mix of pricing and non-pricing strategies will be suggested. This proposal will also explore options of creating or increasing barriers to entry. Further, increased product differentiation will be discussed. Finally, other way to minimize costs will be explored. Increasing Revenue In 2011, total prescription sales in the United States increases approximately 3.5% toRead MoreScarcity And Scarcity Of Economics1282 Words   |  6 Pages Economics studies human behavior and how humans allocate their limited resources (scarcity) with their unlimited wants and differences in the distribution of these resources affect decisions. This concept can be applied to a single person, a family, a country, and globally . Opportunity Cost: Since we have limited resources (scarcity), we usually have to choose one option (choice) and forgo the other alternative when another item or activity is chosen. The concept of opportunity cost is importantRead MoreEconomic Analysis Section of Weight Watchers1707 Words   |  7 Pageslocked a new level of success for Weight Watchers, as it acts to further captivate and convert customers into members that are longer-lived. The website will hopefully attract millions of visitors every month in the United States marketplace, and the total number of members has gone up at a 28% CAGR between 2007 and 2013. The most current annual increase, among 2010 and 2013, of beyond 50% will hopefully be after the presentation of the Points Plus program. Identify elasticity of the product Numerous