Select AI . Note documents will appear dierent inthe browser editor, but instruc
ID: 1145811 • Letter: S
Question
Select AI . Note documents will appear dierent inthe browser editor, but instructors can download e orgia tudent Conten Purpose To assess your ability to: explain the difference between explicit and implicit costs. explain the difference between variable and fixed costs. Action Items explain the difference between the short run and the long run. 1. Write a two to three page paper addressing the following: 1. Describe (in your own words) the concept of opportunity cost 2. Explain what is the difference between the short run and the long run in Economics 3. Imagine that you are considering the purchase of a car from a dealership in your hometown, but you are not willing to pay the asking price. Present the economic arguments and analysis that you can use to convince a sales person to honor your price. 4. Answer the question below in your conclusion: 1. What costs are relevant for a firm? 2. Include a title page and a reference page. The title page and reference page are not included in your page count. Follow APA guidelines when you cite your resources and create your reference page. Submission Instructions Submit your paper to Turnitin.com at least 48 hours before the due date. Respond to any feedback you received from this system.Explanation / Answer
Action Items:
1.
1. Opportunity cost :
Opportunity cost or Alternative cost is a concept of Microeconomics. The term refers to the value of next best alternative that one gives up in order to choose a particular course of action. Simply stated, it is the cost(not benefit) an opportunity that you forgo in order to get something.
For example- You spent 2 hours watching a movie on your holiday. In those 2 hours your opportunity cost of watching movie is the pleasure you lost by not reading a novel or doing something else, or the cost you incurred by not doing your homework, or doing any other works like that.
In monetary terms, suppose you can earn $10 a hour by doing a certain work. If you spend 2 hours watching a movie then your opportunity cost of watching movie would be $20 that you could have earned by doing that certain work instead of Watching movie.
2. In economics, short run or long run doesn't refer to any fixed period of time.
Short run is the time period during which quantities of at least one factor of production is fixed and other can be varied.
In terms of costs measuring, short run is the time period during which fixed costs are already paid and they are sunk in nature i.e. it can't be recovered.
Wheather long run refers to the time period during which it is possible to alter all factor of production i.e. quantities of all factor of production varies. And in terms of costs measuring long run is the time period during which fixed costs are really not 'fixed' because they are not decided and paid yet.