* 37%@.} 2:21 AM uic.blackboard.com .. I cricket 5, (12 points-parts AD at 3 poi
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* 37%@.} 2:21 AM uic.blackboard.com .. I cricket 5, (12 points-parts AD at 3 points each) Raissa and Yuhao operate a furniture refinishing business during the summer. When we talked about the total opportunity cost of attending college we noted that there were explicit costs (e.g., tuition), as well as implicit costs (e.g., foregone income- income you could have earned if you were working instead of going to school). Which of the costs noted below are an explicit cost of running the business, and which are implicit costs. In the space provided at the end of each statement, write (E) for explicit, (I) for implicit, (N) for neither, or (B) for both. A. Supplies such as paint stripper, varnish, polish, sandpaper, etc. B. Wages paid to part-time help: C. A van donated to them by Mr. Bill that is used only for transporting furniture: D. The paid summer internships that Raissa and Yuhao turned down to operate the business: 6. (12 points-parts A, B and C) Suppose people who are thinking about buying an existing home (i.e. demanders in the housing market) and current home owners who are thinking about selling their homes (i.e, suppliers in the housing market) suddenly believe that existing home prices are likely to be significantly higher next year than this year. 6A (4 pts.) Will this change in expectations cause the demand for existing homes to increase or decrease this year? Explain. 6B (4 pts.) Will this change in expectations cause the supply of existing homes on the market to increase or decrease this year? Explain. 6C (4 pts.) What effect will these changes in expectations have on the price of existing homes this year? Explain.Explanation / Answer
Q5.
The explicit cost is the cost incurred by the firm for using its factors of production. While implicit cost is basically the opportunity cost.
a. Explicit cost
As these raw materials are needed to run their business and is a kind of out of the pocket expenditure'.
b. Explicit cost
Wages are the expenses to use a factor of production which is labour in this case.
c. Neither explicit nor implicit
As the van has been donated by Mr Bills therefor they have no cost associated with it.
d. Implicit Cost.
Both Raissa and Yuhao foregone the opportunity to be a part of the summer internship. Therefore it is the opportunity cost associated with the business.
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