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You have a business... you have lease a small shop for 12 months, all equipment has been bought and in the next 12 months you cannot buy any extra equipments. For the year, the total explicit costs are $25,500 and the implicit costs are $45,000.
1. Give some examples of what your explicit and implicit costs, what period is the short-run and how would the law of diminishing returns be likely to apply in this business if it is doing so well that I would start taking extra staff?
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