BE 301 final exam

True or False? If a producer can produce an additional widget at a cost of $4 and a consumer values an additional widget at $6, allowing the two parties to trade will result in a Pareto improvement.

True, Pareto improvement is a change in allocation that harms no one and helps at least one person

True or False? Seeing the market as a "process" is a feature of both the Austrian school of economics and the classical economics of writers like Adam Smith.

True

True or False? Specializing and trading according to comparative advantage can allow two people (or countries) to both consume outside (further from the origin) their respective production possibilities frontiers?

True

True or False? When the long-run average cost curve for a firm is horizontal, the firm is experiencing constant returns to scale.

True

Which of the following changes would increase the supply of widgets? technological innovation an increase in workers' hourly wages an increase in the price of widgets the exit of firms from the industry

an increase in the price of widgets

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business, during which he didn't draw a paycheck, his total revenues were $150,000 and his explicit costs totaled $85,000. What is Tom's economic profit for his first year in business? $85,000 $65,000 $0 $20,000

$0

The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $5 for 10,000 widgets. At that level of output, the firm's average total costs equal $100 $10 $150 $15

$15

Tony is the owner of Tony's Taqueria. Tony is a profit-maximizing owner whose firm operates in a competitive market. Hiring one more worker costs Tony $200 and has a marginal product of 40 tacos. Assuming Tony has no other variable costs, and fixed costs of $120, what is the marginal cost of a taco? $8 $200 $5 There is insufficient information available to answer this question.

$5

Alice would pay up to $10,000 for a signed first-edition copy of Human Action by Ludwig von Mises, but no more. Bob has one, and he would sell it for as little as $100, but no less. If Bob sells Alice his copy for $5,000, what is Alice's consumer surplus from the transaction? $9,900 $10,000 $4,900 $5,000

$5,000

If the price elasticity of demand for a good is 2, then a 10 percent increase in price results in a: 500 percent increase in quantity demanded 20 percent decrease in quantity demanded 20 percent increase in quantity demanded 0.2 percent decrease in quantity demanded

20 percent decrease in quantity demanded

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 5, Q = 125) and (L = 6, Q = 152). Then the marginal product of the 6th worker is 37 units of output. 27 units of output. 162 units of output. 25 units of output.

27 units of output.

Economies of scope

A firm can produce two products more cheaply together than separately

The term "invisible hand" was coined by Adam Smith. David Ricardo. Karl Marx. Confucius

Adam Smith.

In the long run: A firm can change its scale of production, but it can't exit the industry. A firm can shut down, but it can't exit the industry. All of a firm's costs are variable. A firm always experiences economies of scale.

All of a firm's costs are variable.

The capabilities of flexible manufacturing systems are often broken down into machine flexibility, which describes the potential to produce multiple products and change the sequence of operations, and routing flexibility, which describes the potential to perform an operation with multiple machines. Which of the following types of efficiencies does flexible manufacturing help a firm achieve? Economies of scale Economies of scope Learning by doing All three of these

All three of these

According to the paper by Martin Perry referenced in the text, what problem did forward integration into fabrication solve for Alcoa? Because bauxite reserves were limited, Alcoa needed to reserve supplies for its own use instead of selling scarce virgin ingot to other fabricators. With forward integration, Alcoa was able to avoid increasing the supply of secondary aluminum. With vertical integration into fabrication, Alcoa was able to avoid opportunistic "holdup" by its customers. Fabricating products like sheet metal, cookware, and cable allowed it to keep prices to users with inelastic demand high without sacrificing the market for uses where demand was inelastic.

Because bauxite reserves were limited, Alcoa needed to reserve supplies for its own use instead of selling scarce virgin ingot to other fabricators.

The CEO of Acme Widgets is considering shutting down this month to avoid large losses, but the CFO points out that as a large employer Acme is required to give its workers 60 days notice of a plant closing or layoff. If they close the plant, Acme will still have to pay its workers this month. The CEO should: Close the plant anyway, because it can save all of its fixed costs. Keep the plant open, as long as revenues will be at least cover the costs of wages. Close the plant anyway, if there's no way to earn at least enough revenue to cover variable costs. Keep the plant open, as long as average revenue is at least equal to average fixed costs.

Close the plant anyway, if there's no way to earn at least enough revenue to cover variable costs.

Which of the following statements is a normative statement? Raising the minimum wage would increase the number of jobs available to low-skilled workers. Congress should increase the size of stimulus payments during the current pandemic. Paying for kidney donations would increase the number of donors. More women participate in the workforce now than during the 1970s.

Congress should increase the size of stimulus payments during the current pandemic.

Which of the following is an example of a barrier to entry? Existing firms face decreasing returns to scale. Copyright law gives J. K. Rowling the exclusive right to sell her novels. Few consumers want to buy SPAM-flavored ice cream. The local barber shop offers a discount to military customers.

Copyright law gives J. K. Rowling the exclusive right to sell her novels.

Which of the following is a condition for long-run equilibrium in a competitive industry? The inputs employed in the industry earn less than they would had they been used elsewhere. Each firm in the industry is earning zero economic profit. Each firm in the industry will produce that level of output at which marginal cost is the lowest. The number of new entrants into the industry is positive.

Each firm in the industry is earning zero economic profit.

Consider the production function Q=10K0.6L0.4 This production function: Exhibits constant returns to scale. Exhibits increasing returns to scale. Exhibits decreasing returns to scale. Is associated with a U-shaped long-run average cost curve.

Exhibits constant returns to scale.

True or False? An increase in wages for cooks won't decrease the supply of restaurant meals because restaurants are able to substitute capital and/or other inputs for some of the cooks' labor.

False

True or False? In the long run, the market supply curve always slopes up.

False

True or False? Profit can be defined as total revenue minus implicit costs.

False, not just implicit costs but all

Which of the following is true of learning by doing? It results from economies of scale. It results from a firm's cumulative output experience. It results from an increase in the price of inputs. It results from the substitution of one input by a costlier input.

It results from a firm's cumulative output experience.

Which of the following economic thinkers was not associated with the "Marginal Revolution" of the late 19th century. William Stanley Jevons Karl Marx Léon Walras Carl Menger

Karl Marx

A market structure in which a few large firms dominate a market

Oligopoly

Suppose a plague of locusts destroys a large portion of this year's wheat crop, causing 20% less wheat to be sold this year at a price that is 40% higher. From this we can conclude that: Overall, wheat farmers' revenues will be down this year, because demand was inelastic. Overall, wheat farmers' revenues will be down this year, because demand was elastic. Overall, wheat farmers' revenues will be up this year, because demand was elastic. Overall, wheat farmers' revenues will be up this year, because demand was inelastic.

Overall, wheat farmers' revenues will be up this year, because demand was inelastic.

Which of the following is a normative statement? Imposing a minimum wage is unfair to employers. The availability of legal abortion decreased crime. More women participate in the workforce now than during the 1970s. Paying for kidney donations would increase the number of donors.

Paying for kidney donations would increase the number of donors

Acme Widget Company is producing 100 widgets per month and selling them for $10 each. Acme's CEO observes that it could produce 1 more widget for only $7 more, without affecting the price, and suggests that it increase its output. The CFO objects, because the average total cost of producing 101 widgets is $12, which is more than the selling price. Who is right? The CFO is correct, because producing one more widget will decrease the firm's profit. The CEO is correct, because producing one more widget will increase the firm's profit. The CEO is correct, because the MC curve is above the ATC curve at 101 widgets. There is not enough information to answer, because we don't know the cost of the first 100 widgets.

The CEO is correct, because producing one more widget will increase the firm's profit.

Which of the following is held constant along a given demand curve? The consumers' income. The cost of producing the good the demand curve represents. The price of the good the demand curve represents. The quantity of the good the demand curve represents.

The consumers' income.

True or False? If new firms enter an industry, the short-run supply curve shifts out and to the right.

True

True or False? In the long run, firms in a perfectly-competitive industry make zero economic profit.

True

If hamburger is an inferior good, which of the following is likely to happen as a result of an increase in consumer incomes? The supply curve shifts to the left. More hamburger is sold. The price of hamburger falls. Demand for hamburger increases.

The price of hamburger falls.

Suppose consumers in Lawrence demand 100 pounds of potatoes per week when the price is $5 per pound, but they would demand only 80 pounds of potatoes at a price of $6 per pound. Which of the following statements is consistent with this story? The price increase decreases demand for potatoes. This situation corresponds to a movement along the potato demand curve. The price increase shifts the demand curve for potatoes to the right. This situation violates the Law of Demand.

This situation corresponds to a movement along the potato demand curve.

Wanda's Widgets can sell 5 widgets at a price of $5 or 6 units when she lowers the price to $4. If producing the 6th widget costs $4: Wanda's marginal revenue is positive for the 6th widget. Wanda is operating in a perfectly-competitive market. Wanda should produce less than 6 widgets. Demand is price elastic at prices below $4.

Wanda should produce less than 6 widgets.

Which of the following is an example of an externality? When Alice gets a flu shot, it also reduces Bob's chances of getting the flu. Slaughtering a cow produces liver as well as steak. When Alice gives Bob her homemade jam he shares it with Charli. Amazon Prime subscribers receive free video streaming as well as free shipping.

When Alice gets a flu shot, it also reduces Bob's chances of getting the flu.

Consider two goods, X and Y. If the price of Y increases and, as a consequence, the demand curve for X shifts to the left, then: X and Y are unrelated. X and Y are inferior goods. X and Y are substitutes. X and Y are complements.

X and Y are complements.

Alice, the only rancher in Dobbstown, lives next door to Bob, the only farmer in Dobbstown. Once per year, Alice's cattle wander into Bob's unfenced field, causing $2000 worth of damage to his crop. Under current law, Alice is legally liable for the damage to Bob's crops, and must pay him $2000 in compensation for the damage. Bob could prevent the damage completely by building a fence that costs $1000 per year to maintain, but he has no incentive to do so. Fencing in Alice's range would be prohibitively expensive. At the next town meeting, Alice proposes a new ordinance that would require farmers to build a cattle-proof fence around their crops. This change would lead to: neither a Pareto improvement nor a Kaldor-Hicks improvement a Pareto improvement, but not a Kaldor-Hicks improvement both a Pareto improvement & a Kaldor-Hicks improvement a Kaldor-Hicks improvement, but not a Pareto improvement

a Kaldor-Hicks improvement, but not a Pareto improvement

learning by doing

a reduction in costs accompanying higher cumulative volume of production

agglomeration economies

a reduction in costs when firms in one industry locate close to one another

Prices are low in the widget industry, and Acme Widgets is currently producing widgets while covering its variable cost but not covering all of its fixed costs from its land lease, factory construction, etc. This situation is best described as: a short-run situation where Acme is operating at a loss a short-run situation where Acme will shut down temporarily a long-run situation, because Acme has no fixed factors of production a long-run situation, because Acme has exited the industry

a short-run situation where Acme is operating at a loss

Charli spends all of her $100 per week income on apples and bananas. Which of the following would change the slope of Charli's budget line? an increase in Charli's income to $200 a change in Charli's tastes, so that she values apples more highly than before news that the apple crop will be poor next year an increase in the price of apples

an increase in the price of apples

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a small increase in output will increase the firm's profit a small decrease in output will increase the firm's profit total revenue exceeds total cost total cost exceeds total revenue

a small increase in output will increase the firm's profit

When marginal cost is equal to average total cost: average total cost is minimized. average variable cost is minimized. the firm's profit is maximized. all three of these answers are true.

average total cost is minimized.

One reason that airlines offered excellent in-flight food and other amenities in the 1960s & 1970s could be: regulators mandated minimum standards for in-flight meals. binding price floors for plane flights. the industry was not regulated until 1978. air travel was monopolized until the late 70s.

binding price floors for plane flights.

Demand is said to be price elastic if buyers do not respond much to changes in the price of the good. demand increases when incomes increase. demand shifts substantially when income or the expected future price of the good changes. buyers respond substantially to changes in the price of the good.

buyers respond substantially to changes in the price of the good.

Demand is said to be price elastic if buyers do not respond much to changes in the price of the good. demand shifts substantially when income or the expected future price of the good changes. buyers respond substantially to changes in the price of the good. demand increases when incomes increase.

buyers respond substantially to changes in the price of the good.

If demand is unit elastic, a small decrease in price will cause the total revenue in the market to: change very little decrease significantly increase significantly fall to zero

change very little

If demand is unit elastic, a small decrease in price will cause the total revenue in the market to: increase significantly decrease significantly change very little fall to zero

change very little

Monopolies use their market power to: charge a price that is higher than marginal cost charge prices that equal minimum average total cost increase the quantity sold as they increase price dump excess supplies of their product on the market

charge a price that is higher than marginal cost

A rational or purposive decision-maker is one who: has perfect information. chooses actions they believe will help them achieve their goals. makes perfect decisions.

chooses actions they believe will help them achieve their goals.

Which term refers to the principle that people can mutually-benefit through trade whenever their cost of producing two goods differs? coercion autarky comparative advantage economies of scope

comparative advantage

Which of the following costs of publishing a book is a fixed cost? shipping and postage expenses author royalties of 5% per book the costs of paper and binding composition, typesetting, and jacket design for the book

composition, typesetting, and jacket design for the book

Suppose the equilibrium wholesale price of milk is $1/gal., but the government prohibits sales at less than $2/gal. Which of the following is not a likely consequence of this price floor? dairy farmers sell more milk dairy farmers bundle milk with butter and cheese dairy farmers lobby government to purchase unsold milk grocery chains vertically integrate with dairies

dairy farmers sell more milk

Which of the following events must cause equilibrium price to fall? demand and supply both increase demand increases and supply decreases demand decreases and supply increases demand and supply both decrease

demand decreases and supply increases

Which of the following events must cause equilibrium price to fall? demand decreases and supply increases demand increases and supply decreases demand and supply both decrease demand and supply both increase

demand decreases and supply increases

In the short run, the size of a widget factory is fixed. As more workers are hired, output increases, but each additional worker adds less to output. The term that describes this situation is: diminishing marginal returns to labor diseconomies of scale diseconomies of scope diminishing marginal cost

diminishing marginal returns to labor

Acme Pools is very busy installing pools during the summer, but its workers and equipment are usually idle for most of the winter. One winter, Acme's owners decide to enter the snow removal business, where they can use their existing trucks and keep their workers busy during the slow pool construction season. This amortizes the cost of capital and fixed labor costs like health insurance over more output, making production of both services cheaper. This is an example of: economies of scope. economies of scale. joint production. learning by doing.

economies of scope.

The law of demand states that, other things equal, when the price of a good falls, the demand for the good rises. falls, the quantity demanded of the good rises. rises, the demand for the good falls. rises, the quantity demanded of the good rises.

falls, the quantity demanded of the good rises.

Pizza is a normal good if the demand for pizza increases when the price of pizza falls. for pizza increases when income rises. curve for pizza slopes upward. curve for pizza shifts to the right when the price of burritos rises, assuming pizza and burritos are substitutes.

for pizza increases when income rises.

Suppose, thanks to technological advances in the oil drilling industry, gasoline prices fall to $1.00 per gallon. How will this affect the market for automobiles? gas and autos are complements, so car prices will decrease and more cars will be sold autos are a normal good, so auto prices will increase and fewer autos will be sold gas and autos are complements, so car prices will increase but more cars will be sold gas is an inferior good, so auto prices will increase and more autos will be sold

gas and autos are complements, so car prices will increase but more cars will be sold

Suppose you are the owner of Sam's Steakhouse, a casual dining restaurant in the fictional town of Tailing Mountain, PA. After learning that the local mine, which employs most of the town's residents, is about to close, you ask your economist friend Erin for advice. She suggests that you add a $6.99 hamburger steak meal to your menu because: hamburger is a substitute good. hamburger is a normal good. hamburger is a superior good. hamburger is an inferior good.

hamburger is an inferior good.

In a competitive market, the actions of any single buyer or seller will discourage entry by competitors. influence the profits of other firms in the market. Both discourage entry by competitors and influence the profits of other firms in the market. have a negligible impact on the market price.

have a negligible impact on the market price.

Scotch whisky is matured in oak casks for three or more years. This suggests that, other things equal, an increase in interest rates will: have no effect on the cost of producing Scotch increase the cost of producing Scotch decrease the cost of producing Scotch

increase the cost of producing Scotch

Firms may experience diseconomies of scale when average fixed costs begin to rise again. large management structures are bureaucratic and inefficient. they are too small to take advantage of specialization. there are too few employees, and managers do not have enough to do

large management structures are bureaucratic and inefficient.

The amount by which total cost rises when the firm produces one additional unit of output is called average total cost. external cost. total variable cost. marginal cost.

marginal cost.

In the US DOJ's recent suit against Penguin and Simon & Schuster, their primary complaint is the potential for which of the following? copyright protection price discrimination increased book prices monopsony power

monopsony power, market with only one single buyer

If price remains above the average total cost for firms in a competitive industry: existing firms will exit that industry. the number of firms in the industry will neither increase nor decrease. new firms will enter that industry. the existing firms will be making zero economic profit.

new firms will enter that industry.

If the demand for peanut butter decreases as consumer incomes fall, then peanut butter is what type of good? inferior Giffen normal substitute

normal

normative statement

one that makes a value judgement, no one can prove the statement correct or incorrect

Adam Smith suggested that an invisible had guides market economies. In this analogy, what is the baton that the invisible hand uses to conduct the economic orchestra? prices subsidies the Federal Reserve the government

prices

Economists assume that the goal of the firm is to maximize total: profit. revenue. satisfaction. social benefit.

profit.

If regulators hope to find lucrative jobs in the industry they regulate after they leave government service, and thus make decisions that are favorable to incumbent firms in the industry, this is an example of: arbitrage. the nirvana fallacy. the Invisible Hand. regulatory capture.

regulatory capture; regulatory agencies may be dominated by the interests they regulate and not by the public interest.

Suppose two firms in a duopolistic industry are attempting to collude by restricting production and maintaining high prices. Which of the following government regulations will make it harder for them to successfully collude? A requirement that the product meet high quality standards. A requirement to publish all their prices in advance. A requirement that firms wishing to enter the industry obtain regulatory approval. Removing barriers to international trade.

requirement to publish all their prices in advance.

If the government imposes (and enforces) a binding price ceiling on the market for apples, but doesn't provide a formal rationing mechanism: resources will be wasted as buyers compete to obtain the good. the price of apples is forced to be higher than the equilibrium price. too many apples will be produced. apple producer profits will increase.

resources will be wasted as buyers compete to obtain the good.

If an increase in minimum wages forces restaurant owners to pay workers more, we would expect: restaurant prices to fall & fewer meals to be served restaurant prices to rise & more meals to be served restaurant prices to fall & more meals to be served restaurant prices to rise & fewer meals to be served

restaurant prices to rise & fewer meals to be served

When quantity demanded decreases at every possible price, the demand curve has shifted to the right. not shifted; rather, we have moved along the demand curve to a new point on the same curve. shifted to the left. not shifted; rather, the demand curve has become flatter.

shifted to the left.

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the supply of flour to decrease. supply of flour to increase. demand for flour to decrease. demand for flour to increase.

supply of flour to increase.

When fish sales fell in New England after the Roman Catholic church ended the proscription against eating meat on Fridays, this was an example of a shift in demand caused by a change in: tastes and preferences incomes expectations input prices

tastes and preferences

Which of the following changes would increase the supply of widgets? an increase in the price of widgets an increase in workers' hourly wages technological innovation the exit of firms from the industry

technological innovation

Which concept below refers to the idea that markets are a way to "organize" economic activity without central direction? the Invisible Hand Occam's razor Chesterton's fence the Overton Window

the Invisible Hand

In the period before World War II, Alcoa was likely a natural monopoly because It was a superior producer of aluminum cookware. The domestic market for aluminum was not yet large enough for two companies to produce at the minimum efficient scale. It controlled key sources of bauxite. Tariffs and high transportation costs kept foreign competition at bay.

the domestic market for aluminum was not yet large enough for two companies to produce at the minimum efficient scale.

A perfectly competitive firm faces a horizontal demand curve, which implies that: the price in the market never changes. the quantity of output produced by the firm is indeterminate. the firm makes zero accounting profits. the firm cannot affect price by any action it takes.

the firm cannot affect price by any action it takes; demand is perfectly elastic and will fall to zero if the seller raises the price.

Economies of scale

the firm's long-run average costs get lower get lower when it produces higher quantities

Which of the following is an example of a triangular intervention? the government confiscates 30% of Alice's income the government drafts Bob into the Army the government requires employers to provide health insurance to employees the government prohibits Charly from smoking in her own home

the government requires employers to provide health insurance to employees

A non-binding price ceiling occurs when: the legal minimum price is below the market-clearing price. the legal maximum price is below the market-clearing price. the legal maximum price is above the market-clearing price. the legal minimum price is above the market-clearing price.

the legal maximum price is above the market-clearing price.

The supply curve of a perfectly-competitive firm in the short-run is: the marginal cost curve. the marginal cost curve above the minimum of average cost. the marginal cost curve above the minimum of average variable cost. the negatively sloped portion of the marginal cost curve.

the marginal cost curve above the minimum of average variable cost.

The supply curve of a perfectly-competitive firm in the short-run is: the marginal cost curve. the negatively sloped portion of the marginal cost curve. the marginal cost curve above the minimum of average variable cost. the marginal cost curve above the minimum of average cost.

the marginal cost curve above the minimum of average variable cost.

The marginal revenue curve of a monopolist lies below the demand curve because: the demand curve is unit elastic. the monopolist is a price taker. the marginal revenue curve coincides with the average revenue curve. the monopolist must lower price on all units sold in order to sell additional units.

the monopolist must lower price on all units sold in order to sell additional units.

Suppose one change leads to an increase in the demand for widgets while at the same time another increase leads to a decrease in the supply of widgets. the quantity of widgets will increase, but the effect on price is indeterminate the quantity of widgets will decrease, but the effect on price is indeterminate the price of widgets will increase, but the effect on quantity is indeterminate the price of widgets will decrease, but the effect on quantity is indeterminate

the price of widgets will increase, but the effect on quantity is indeterminate

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates the ticket price was below the equilibrium price. the ticket price was above the equilibrium price. the ticket price was at the equilibrium price. nothing about the equilibrium price.

the ticket price was below the equilibrium price.

The term derived demand refers to: the way the demand for a normal good depends on consumers' incomes. the relationship between price and marginal utility. the way producers' demand for inputs is a consequence of consumers' demand for finished products. the way the demand curve is obtained from income-compensated changes in price.

the way producers' demand for inputs is a consequence of consumers' demand for finished products.

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that consumers do not react to changing prices. there are economies of scale in retail sales. there are diminishing returns to producing and selling retail goods. there are diseconomies of scale in retail sales.

there are economies of scale in retail sales.

Free entry means that: there are no legal barriers to entering the industry. the cost of producing an additional unit of the good is zero. entry of additional firms will not impact the market price. entry of additional firms will not impact input prices.

there are no legal barriers to entering the industry.

If the price in the market for apples is higher than the equilibrium price: there is excess supply & we expect the price to rise there is excess demand & we expect the price to fall there is excess demand & we expect the price to rise there is excess supply & we expect the price to fall

there is excess supply & we expect the price to fall

Wally's Widgets operates in a perfectly-competitive widget market and is currently earning positive economic profits. In the long run, which of the following are likely: total industry output will expand. Wally will exit the industry. Wally will shut down. All three of these are likely.

total industry output will expand.

The three big questions

what, how, for whom

Sebastian decides to open a tree farm. When deciding to open his own business, he turned down two separate job offers of $25,000 and $30,000 and withdrew $20,000 from his savings. Sebastian's savings account paid 3 percent interest. He also borrowed $20,000 from his brother, whom he pays 2 percent interest per year. He spent $15,000 to purchase supplies and earned $50,000 in revenue during his first year. Which of the following statements is correct? ​ Sebastian's economic profit is $4,600. ​Sebastian's total explicit costs are $15,400. ​Sebastian's economic profit (actually, loss) is ($400). ​Sebastian's total implicit costs are $55,600.

​Sebastian's total explicit costs are $15,400.