Production and Cost Minimizing Output Writing Assignment

Production and Cost Minimizing Output
Name
Institutional Affiliation
Date
Question 1
a. This is an explicit cost as the firm pays another organization for the use of the manufacturing equipment. It is a reported input cost of production. Moreover, payments made is evidence of cash outlay as a charge for the factors of production usage CITATION Gre14 \l 1033 (Mankiw, 2014).
b. It is an implicit cost as it implies the economic opportunity cost by the firm if it would rent out its premises for cash or profit instead of using it for personal use. Conversely, this cost is not incurred by the firm. Hence, no cash exchanges take place.
c. Wages are expenses incurred as part of the factors of production of a firm. The organization gives out cash in terms of wages to pay its workers CITATION Gre14 \l 1033 (Mankiw, 2014).
d. An implicit cost as it states the forgone cost of the owner if he/she worked somewhere else.
Pat should minimize implicit costs. These costs include payments for rented equipment and workers’ wages. The two costs increase the direct expenses of the firm reducing the profit margin CIT...