Lectave It Date: 21-Sep-2022 * Gnceps related to Hae costs of firm: @ Total Gst Explicit and Implicit Gd Average Ost (opportunity) Gost Gy Marginal Cost Eg ital Music Player Quantity Averoge Total Gst (9) 600 (initial) 300 601 30) Qy Someone calls you and wants _t» buy one music player. The caller offes $550 for it- Should you accept He offer _ Total Gsteg = 300 x 600 = 180,000 Totel Gsty, = 301 x 60! + [80,901 Difference in total cost (extra cost) = $40) (Marginal Cost.) Selling price = $550% Explicit and [mplicit Costs + £.q. Farmer —> producing rice Inpws: Seeds, Fertilizer, Land , Labour , ‘wrigation cost. , other inputs Explicit Costs Implicit Gsts + Seeds + Labour own labour) + Fertilizer * Land cS ligation * Labour (hired labour) #* Gst uwa qd a typical firm: Gsk ac) Inc AC + increasing ATC f A ate Output Produced Sie ee TFC = AFC xOutput Oukpuk soe ee IM icReTe CoeeeeLEo Va - Division of labour * Adding move labour, specialization can lead to __division _ of labour and increased efficiency . Marginal cost decreases + However, you will eventually ib Me capacity af your _ production unit and marginol cst will start te __increage.% Short Run and Long Run : = Flu K, lands +) * Some inputs cannot be changed in Hat.—_short run. sts ATC ° a Os output OG: ATC i falling Beyond Qs? ATC is rising