EXAMPLE: The following terms are used to describe various economic characteristics of costs. a. Opportunity cost - an opportunity cost is defined as the benefit that is sacrificed when the choice of one action precludes taking an alternative course of action. b. Out-of-pocket cost - are those that require the payment of cash or other assets as a result of their incurrence. c. Sunk cost - are costs that have been incurred in the past. Consequently, they do not affect future costs and cannot be changed by any current or future action. d. Differential cost - is the amount by which the cost differs under two alternative actions. e. Marginal cost - is the incremental cost of producing one additional unit f. Average cost - is the total cost, for whatever quantity is manufactured, divided by the number of units manufactured. Required: Choose one of the terms listed above to characterized each of the amounts described below: 1. The cost of feeding 500 children in a public school cafeteria is $800 per day, or $1.60 per child per day. What economie term describes this $1.60 cost? (average cost) 2. The cost of including one extra child in a day-care center. (marginal cost) 3. The cost of merchandise inventory purchased two years ago, which is obsolete. (sunk cost) 4. The management of a high-rise office building uses 2,500 square feet of space in the building for its own management functions. This space could be rented for $250,000. What economic term describes this $250.000 in lost rental revenue? (opportunity cost) 5. The cost of building an automated assembly line in a factory is $800,000. The cost of building a manually operated assembly line is $375,000. What economic term is used to describe the difference between these two amounts? (differential cost) 6. Referring to the preceding question, what economic term is used to describe the $800,000 cost of building the automated assembly line? (out-of-pocket cost) 7. The cost incurred by a computer manufacturer to produce one more unit in its most popular line of laptop computers, (marginal cost)