1econtest - Principles of Microeconomics Chapter 10...

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Principles of Microeconomics Chapter 10 Review Questions 1.Economic cost can best be defined as: A) any contractual obligation that results in a flow of money expenditures from an enterprise to resource suppliers. B) any contractual obligation to labor or material suppliers. C) compensations that must be received by resource owners to insure their continued supply. D) all costs exclusive of payments to fixed factors of production. Answer: C 2. Implicit costs are: A) regarded as costs by accountants but not by economists. B) payments that a firm makes to other firms or individuals who supply resources to it. C) nonexpenditure costs. D) costs that vary proportionately with output. Answer: C 3. An explicit cost is: A) omitted when accounting profits are calculated. B) a money payment made for resources not owned by the firm itself. C) an implicit cost to the resource owner who receives that payment. D) always in excess of a resource's opportunity cost. Answer: B 4. Accounting profits are typically: A) greater than economic profits because the former do not take explicit costs into account. B) equal to economic profits because accounting costs include all opportunity costs. C) smaller than economic profits because the former do not take implicit costs into account. D) greater than economic profits because the former do not take implicit costs into account. Answer: D 5. Economic profits are calculated by subtracting: A) explicit costs from total revenue. B) implicit costs from total revenue. C) implicit costs from normal profits. D) explicit and implicit costs from total revenue. Answer: D 6. Normal profit is: A) determined by subtracting implicit costs from total revenue. B) determined by subtracting explicit costs from total revenue. C) the return to the entrepreneur when economic profits are zero. D)
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1econtest - Principles of Microeconomics Chapter 10...

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