Posted: August 4th, 2022


1. Accounting profits are typicallya. Greater than economic profits, as accounting profits do not include explicit costsb. smaller than economic profits, as accounting profits do not include explicit costsc. Greater than economic profits, as accounting profits do not include implicit costsd. Equal to economic profits in the long-run2. Which of the following equations is correct?a. Economic profit  = Accounting profit – explicit costsb. Accounting profit = Total Revenue = (explicit costs + implicit costs)c. Economic Profit = Accounting profit – implicit costsd. Normal profit = Accounting profit + economic Profit3. Suppose that the implicit cost for a business was $1,000 and the explicit cost was $5,000 and that the firm sold 1,000 units of its products at $5 per item. We can conclude that the firm’sa. Accounting profit was $5,000 and its economic profit was $0b. Accounting and economic profit were both $0c. Accounting profit was 0 and economic loss was $1,000d. Accounting profit was $0 and economic profit was $1,0004. An example of an implicit cost is a. A payment to a resource ownerb. A business using a building owned by the owner of the business without paying any rentc. The payment of interest on a bondd. Payment of a salary to a CEO of a company5. If the interest rate is 10%, and a business pays $100,000 for a lease on a factory, the explicit costs are a. $10,000b. $110,000c. $100,000d. $90,0006. If the interest rate is 10%, and a business pays $100,000 for a lease on a factory, the implicit costs are a. $10,000b. $110,000c. $90,000d. $100,0007. Accounting profits area. Total revenue minus normal costsb. Total revenue minus explicit and implicit costsc. Total revenue minus explicit costsd. Total revenue minus implicit costs8. Owner provided capital or owner provided labor are examples ofa. Implicit costsb. Accounting costsc. Explicit costsd. Normal rate of return9. Economic profits area. Total revenue minus explicit costsb. Total revenue minus explicit and implicit costsc. Total revenue minus implicit costsd. Total revenue minus accounting costs10. For an economists the short-run means a time perioda. That does not allow the firm to change its plant sizeb. That prohibits firms to change the amount of imported resources it usesc. That prohibits new firms from  entering the industryd. That s between one and five years11. When E1 Torito is deciding how many waiters to hire for a holiday weekend it is making a _________ decisiona. Long runb. Fixed inputc. Short rund. Plant size12. If a firm can vary all of the factors of production it is operating ina. The long runb. The short runc. Equilibriumd. The immediate run13. Which of the following is a long-run adjustment?a. A company hires ten new management traineesb. A restaurant hires a new chefc. A company builds a new manufacturing plantd. A bank hires a new CEO14. The change in output caused by a one-unit change in labor is refered to as thea. Average physical productb. Total physical productc. Marginal physical productd. Compounded physical product15. Phil found that as he continued to crowd laborers into his hot dog stand that the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of the a. Law of diminishing marginal utilityb. Law of diminishing returnsc. Law of increasing opportunitiesd. Law of demand16. In the short run total costsa. Equal to the sum of total fixed costs and total explicit costsb. Equal the sum of total fixed costs and total variable costsc. Equal to the sum of total fixed costs and total implicit costsd. Equal to the sum of total variable costs and total implicit costs17. As long as output increasesa. Average variable costs will decreaseb. Average total costs will decreasec. Average fixed costs decreased. Marginal costs will decrease

Table 22.4Total Output Total Costs0 101 182 213 234 245 266 297 338 389 4410 51

18. Using Table 22.4. we see that when output is 4 units that average total cost equalsa. 6.0b. 24c. 3.5d. 1419. In Table 22.4, total fixed costs area. 8b. 5c. 18d. 1020. In table 22.4, when output is 8 units average variable costs area. 1.25b. 4.5c. 3.5d. 4.7521. Total costs divided by the quantity of production is referred to as a. Marginal costsb. Average total costsc. Average fixed costsd. Average variable costs22. The marginal cost curve always intersects the average total cost cusrve at the point where the average total cost curve where ita. Has a vertical slopeb. Is at its maximumc. Is zerod. Is at its minimum23. The typical cost curves are “U” shaped due to the a. Law of Diminishing Marginal Utilityb. Law  of Demandc. Law of Supplyd. Law of Diminishing Marginal Returns

24. The long run for a business is a period of timea. When most inputs are variableb. When labor is the only input used by the businessc. Longer than a yeard. When all inputs are variable25. If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencinga. Diseconomies of scaleb. Economies of scalec. Constant returns to scaled. Diminishing marginal returns26. A firm doubles its output in the long-run and at the same time the unit cost of production remains unchanged. We can conclude that the firm isa. Exploiting the economies of scale available to itb. Not using the available technology efficientlyc. Facing diseconomies of scaled. Facing constant returns to scale27. The lowest rate of output per unit at which long-run average cost for a firm are at a minimum definesa. Allowable efficient scaleb. Maximum efficient scalec. Minimum efficient scaled. Short-run efficient scale28. Your local farmer has many competitors, and exists in a market structure known as perfect competition. This means that price is determined outside of the individual farmers ability to charge a price higher than the going market for a bushel of wheat, hence the farmer is A. Always able to price produce above the competition and earn a larger profitB. A price maker and can therefore charge different customers different pricesC. Never able to determine any prices it charges for anything, such as  soybeansD. A price taker and cannot affect the price of the produce sold to a great degree29. All of the following are characteristics of a perfectly competitive market EXCEPTa. Buyers and seller have equal access to informationb. Large number of buyers and sellersc. High barriers to entry and exitd. Homogeneous product30. Which of the following is closet to a perfectly competitive market?a. Broccolib. Handmade guitarsc. Computer softwared. Tennis shoes31. The demand curve facing the perfectly competitive firm isa. Perfectly inelasticb. Uplslopingc. Perfectly elasticd. Downsloping32. The demand curve for a perfectly competitive industry isa. Perfectly inelasticb. Perfectly elasticc. Downward slopingd. Unit elastic33. For the perfectly competitive firm the sale pricea. Depends on the fixed cost for the formb. Equals average total costc. Changes as output changesd. Equals average revenue34. Which of the following is true for the perfectly competitive firma. Price and MR are always equalb. Price elasticity of demand is equal to 1c. AR is more than priced. AR is less than price35. The goal of ther perfectly competitive firm is toa. Minimize ATCb. Minimize AFCc. Maximize total profitsd. Maximize total revenue36. Profit maximizing output for the perfectly competitive firm is wherea. TR –ATC = maximumb. TR – MR = maximumc. MR = MCd. TR – TC = maximum

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