Problem 1. What is the difference between explicit and implicit costs? Which of the costs is most closely associated with opportunity costs and why?
Problem 2. State and explain the law of diminishing returns. How does this law apply to a typical day at work or at school? (Or, if you could imagine, taking an on line microeconomics course).
Problem 3 Explain the relationship between AP and MP. Apply a real world example of your own to how this might work.
Problem 4. Explain the relationship between MP and TP. Apply a real world example of your own explaining how this might work.
Problem 5. Suppose that 1 worker generates 8 units of output, 2 workers generate 20, 3 workers generate 35, 4 workers generate 45, and 5 workers generate 42 units out output.
a. Calculate the MP and the AP for each worker. At what point do diminishing returns set in? How would we know this had occurred?
Problem 6. Why does the ATC curve always lie above the AVC curve? Why does the two curves move closer together, but never seem to meet each other?
Problem 7. Why is the AFC always declining while the TFC never does so? How can that be?