Discussion Questions/paragraph Format

What is the difference between accounting costs and economic costs Accounting costs only take into account the explicit costs of conducting a business such as wages, utility bills, cos of raw material etc. Accounting costs are actual, verifiable, and therefore historical in nature. Economic costs consist of opportunity cost, variable costs, and fixed costs. Whereas variable costs and fixed costs may be actual economic costs are forward looking as they encompass what if situations. For example, opportunity costs include lost revenues because of forgoing alternatives. Reference McConnell, C. R., Brue, S. L., Flynn, S. M. (2008). Microeconomics. Boston Irwin Why do economic costs include both explicit (revealed and expressed) costs and implicit (present but not obvious) costs Explicit costs are paid to non-owners of resources they supply, while implicit costs are the cost of resources thatcould have been earned in their best alternative employments. That is implicit costs include the cost of lost opportunities, therefore economic costs include both explicit and implicit costs. Reference McConnell, C. R., Brue, S. L., Flynn, S. M. (2008). Microeconomics. Boston Irwin What are the differences between fixed and variable costs and among total, average, and marginal costs Fixed costs remain constant over a range