a)

i. Explain the differences between economic cost and accounting cost.

ii. What are the differences between explicit and implicit costs?

iii. Discuss the following cost concepts based on the view of the accountants and economists:

 Depreciation cost measurement

 Inventory valuation

 Unutilized facilities

 Measures of profitability

b) Consider the following variable cost function:

VC = 120Q – 9Q2 + 0.25Q3

Fixed costs are equal to $180 and Q is the output.

i. Determine the average variable cost function.

ii. Find the minimum AVC quantity.

iii. Determine the marginal cost function.

iv. The marginal cost is also the derivative of variable cost. Explain