Explain the concepts of explicit costs and implicit costs. Why do economists include implicit costs in their calculation of profits?
What will be an ideal response?
Explicit costs equal the financial costs of a resource. Implicit costs are equal to that portion of the value of a resource for which no financial payment is made. Accountants are interested in how money is being used, while economists are interested in how economic resources are being used.
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When organizing a collective action, it is generally true that the larger the group the:
A. lower the costs and benefits per person. B. higher the costs and lower the benefits per person. C. lower the costs and higher the benefits per person. D. higher the costs and benefits per person.
Average fixed cost is found by dividing ________ by output; as output rises, average fixed cost ___________.
Fill in the blank(s) with the appropriate word(s).
Of the following high-income countries, which has the highest infant mortality rate?
A) Canada B) Japan C) the United Kingdom D) the United States
Moral hazard occurs when contracts are written in such a way that
A) the interests of agent and principal converge. B) the interests of agent and principal diverge. C) agents will wish to maximize the principal's utility. D) production and risk-bearing efficiency are achieved.