Tutor profile: Stephanie P.
How would you define opportunity cost? Give an example.
Opportunity cost is another way of saying "trade-off". This is because each time you , make a choice, there is something that you may be giving up. For example, say you decide to go to college full time. The next best thing you could have done, work full time or travel, and that would be the opportunity cost. Some economists will break down opportunity costs into explicit and implicit. Explicit opportunity costs pertain more to money and implicit opportunity costs pertain to things other than money.
What is the difference between a variable cost and a fixed cost?
A fixed cost stays the same no matter how many units are produced, while a variable cost "varies" depending on the quantity of units that are produced, For example, the more units a company produces, the more material costs they will incur. Costs such as monthly rent and insurance will remain the same.
If total revenue was $100 and total cost was $45, what is the total profit?
The total profit would simply be revenue-cost, or $100-$45 which is $55.
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