Question 2a) A producer borrows money and starts a business. He himself looks after thebusiness. Identify implicit and explicit costs from this information. Explain.b) List and explain which of the following is a fixed cost or a variable cost forCaribbean Airlines.The cost of fuel used in its planes.The rent on its Piarco headquarters.The lease payments on its current inventory of jets.iv.i.ii.iii.The cost of peanuts it serves to passengers.The salary paid to the Chief Executive Officer.V.c) How is the difference between average total cost and average variable costimpacted by an increase in output?

An ‘implicit cost’ is a cost that not recorded for accounting purposes. ‘Implicit costs’ represent…

Question 2 a) A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. b) List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. i. The rent on its Piarco headquarters. The lease payments on its current inventory of jets. iv. The cost of fuel used in its planes. ii. iii. The cost of peanuts it serves to passengers. The salary paid to the Chief Executive Officer. v. c) How is the difference between average total cost and average variable cost impacted by an increase in output?

Question 2 a) A producer borrows money and starts a business. He himself looks after the business. Identify implicit and explicit costs from this information. Explain. b) List and explain which of the following is a fixed cost or a variable cost for Caribbean Airlines. i. The rent on its Piarco headquarters. The lease payments on its current inventory of jets. iv. The cost of fuel used in its planes. ii. iii. The cost of peanuts it serves to passengers. The salary paid to the Chief Executive Officer. v. c) How is the difference between average total cost and average variable cost impacted by an increase in output?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section12.1: What Are Costs?

Problem 1QQ

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