Give an example of an opportunity cost that an accountant would not count as a cost. Why would the accountant ignore this cost? An accountant would not count the owners opportunity cost of alternative employment as an accounting cost. An example is given in the text in which Caroline runs a cookie business, but she could instead work as a computer programmer. Because she's working in her cookie factory, she gives up the opportunity to earn $100 per hour as a computer programmer. The accountant ignores this opportunity cost because money does not flow into or out of the firm. 4/ Draw a production function that exhibits diminishing marginal product of labor. Draw the associated total-cost curve. (In both cases, be sure to label the axes.) Explain the shapes of the two curves you have drawn.

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Give an example of an opportunity cost that an accountant would not count as a cost. Why would the accountant ignore this cost? An accountant would not count the owners opportunity cost of alternative employment as an accounting cost. An example is given in the text in which Caroline runs a cookie business, but she could instead work as a computer programmer. Because she's working in her cookie factory, she gives up the opportunity to earn $100 per hour as a computer programmer. The accountant ignores this opportunity cost because money does not flow into or out of the firm. 4/ Draw a production function that exhibits diminishing marginal product of labor. Draw the associated total-cost curve. (In both cases, be sure to label the axes.) Explain the shapes of the two curves you have drawn. B. Total-cost curve Production function Production function The production function shows the relationship between the number of workers hired and the quantity of output produced. The production function gets flatter as the number of workers increases, reflecting diminishing marginal product. The total-cost curve in panel shows the relationship between the quantity of output produced and total cost of production. The total-cost curve gets steeper as the quantity of output increases because of diminishing marginal product Under what conditions will a firm shut down temporarily? 

Explain. The firm shuts down if the revenue that it would earn from producing is less than its variable costs of production. In other words, a firm chooses to shut down if the price of the good is less than the average variable cost of production. This rule is intuitive: When choosing to produce, the firm compares the price it receives for the typical unit to the average variable cost that it must incur to produce the typical unit.