10. The Costs of Production

A short run cost function assumes that:

Fast Fingers Freddy gives banjo lessons for \$50 per hour. One day, he spends 8 hours planting \$100 worth of seeds on his farm. If the seeds yield \$600 worth of crops, what is his accounting profit and economic profit?

What is the difference between explicit costs and implicit costs?

A company currently has total costs of \$4,096 when producing 128 units. If total fixed costs equal \$1,024, what is average variable cost?

Rose incurs \$7,200 per month in fixed costs operating her floral shop. She pays her employees \$9 per hour and had three assistants working 120 hours this month. Her other variable costs were \$800 this month. What are Rose's total variable costs and total costs this month?

Ricky Smooth opens up a hunch punch stand in his dorm room every Wednesday for two hours. He spends \$40 on ingredients and sells \$120 worth of hunch punch. In those same two hours, Ricky could have been a nude model for the art department earning \$60. Ricky Smooth has an accounting profit of ________ and an economic profit of ________.