# Quiz 5.docx - Question1 1/1pts Bobusedtoearn\$40...

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QuestionÂ 11Â /Â 1Â ptsBobÂ usedÂ toÂ earnÂ \$40,000Â perÂ yearÂ inÂ hisÂ jobÂ asÂ aÂ nurse,Â butÂ heÂ quitÂ inÂ orderÂ toÂ openÂ hisÂ ownÂ pizzaÂ shop.Â BobÂ usedÂ \$10,000Â fromÂ hisÂ ownÂ savingsÂ accountÂ andÂ borrowedÂ \$200,000Â moreÂ fromÂ hisÂ bank.Â TheÂ interestÂ rateÂ isÂ 4%.Â InÂ Bobâ€™sÂ firstÂ yearÂ ofÂ businessÂ heÂ earnedÂ \$80,000Â inÂ revenueÂ andÂ theÂ costÂ ofÂ ingredientsÂ (flour,Â tomatoÂ sauce,Â cheese,Â etc.)Â wasÂ \$67,000.Â ForÂ hisÂ firstÂ yearÂ ofÂ business,Â Bobâ€™sÂ accountingÂ profitÂ wasÂ _______,Â andÂ hisÂ economicÂ profitÂ wasÂ ______.Correct!\$5,000;Â -Â \$35,400-Â \$35,000;Â -Â \$5,000\$75,000;Â \$40,400\$67,000;Â \$115,400RememberÂ theÂ differenceÂ betweenÂ accountingÂ profitÂ andÂ economicÂ profitÂ isÂ inÂ theÂ wayÂ costsÂ areÂ calculated.Â AccountingÂ profitÂ takesÂ intoÂ accountÂ explicitÂ costsÂ only,Â whereasÂ economicÂ profitÂ considersÂ bothÂ explicitÂ andÂ implicitÂ costs.QuestionÂ 20Â /Â 1Â ptsEconomistsÂ assumeÂ thatÂ firmsmaximizeÂ theÂ quantityÂ ofÂ outputÂ producedCorrectÂ Answer
actÂ asÂ thoughÂ theyÂ intendÂ toÂ makeÂ profitÂ asÂ largeÂ asÂ possiblemaximizeÂ bothÂ profitÂ andÂ theÂ amountÂ ofÂ outputÂ producedYouÂ AnsweredmaximizeÂ totalÂ revenueTheÂ bestÂ wayÂ toÂ predictÂ aÂ firmâ€™sÂ behaviorÂ isÂ toÂ assumeÂ thatÂ theyÂ areÂ maximizingÂ profit.QuestionÂ 31Â /Â 1Â ptsLaborMarginalProduct01821031341258677483ConsiderÂ theÂ tableÂ above.Â IfÂ 4Â workersÂ areÂ hired,Â howÂ muchÂ outputÂ isÂ produced?412
31Correct!43SumÂ theÂ marginalÂ productsÂ upÂ toÂ LÂ =Â 4.

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