1. What are opportunity costs? How do explicit and implicit costs relate to opportunity costs? 2. According to the mathematical laws that govern the relationship between average total cost and marginal cost, where must these two curves intersect? True/False : 3. When firm experiences increasing returns to scale its AC will decrease. Tests: 4. To an economist, total costs include A) explicit, but not implicit costs. B) implicit, but not explicit costs. C) explicit and implicit costs. D) neither explicit nor implicit costs. 5. Costs of production that change with the rate of output are A) sunk costs. B) opportunity costs C) fixed costs. D) variable costs