Problem 1: Which of the following statements is an example of a firms implicit costs?
(a) For Pottery Super Center to stay in business, it must pay its cashiers $100 per day of work.
(b) In order for Smoothie Giant to create Superboy smoothies with its blenders, it must give up the opportunity to use those blenders to create protein blend milk shakes.
(c) Hunter's Hunting Hut rents a lobby in the Holiday Hotel to sell its products close to hunting lodges in the winter.
(d)Jeremiah was a Bullfrog Sun Products CEO. He paid federal taxes on his revenue for the 2009 year
Problem 2: Which of the following equations is FALSE for perfectly competitive firms?
(a)Total cost = fixed cost + variable cost
(b) Marginal cost = change in total cost / change in quantity of output
(c) Average total cost = total cost / quantity of output
(d) Average variable cost = fixed cost / quantity of output