1. Define explicit and implicit costs.
The opportunity cost equal to what a firm give up in order to use factors which in neither in purchases or hires. It’s the opposite of an explicit cost, which is borne directly. 2. Define Normal Profit and explain why it is an implicit cost.
The difference between total revenue and total costs (explicit and implicit costs) equals zero, and it is an implicit cost because opportunity cost is considered in it. 3. Define Economic Profit, Short Run and Long Run.
The difference between the revenue received from the sale of an output and the opportunity cost of the inputs uses.
Profit in the short run is that when a period is short enough that some of the firm can’t be varied.
Profit in the long run is when the period is long that inputs can be varied. 4. Define Total Product and Marginal Product, and Diminishing Returns.
TP: is the total amount produced by a firm during time period.
MP: is the extra unit of output obtained by one extra unit of some factor, all other factors being held constant.
5. Calculate MP for the following: Labor Total Product 0 100 1 220 2 350 3 450

Graph the TP and MP functions for the above data. Show on the graphs the point at which diminishing returns begins.

6. Define Total Costs, Total Fixed Cost, and Total Variable Cost. Show the curves representing each of these costs on one graph.
The total cost of production is made up of variable costs, which vary according to the quantity of a good produced and includes inputs like labor, raw materials and fixed costs.
Variable Cost are cost expenses which vary in direct proportion to quantity of output, however Fixed Cost rise whenever production increase and falls whenever it is reduced.

7. Define Average Total Cost, Average Variable Cost, Average Fixed Cost, and