CHAPTER 13 - Chapter13 1 a b c d ANSWER:d

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Chapter 13 The Costs of Production 1. Which of the following is an implicit cost? a. salaries paid to owners who work for the firm b. interest on money borrowed to finance equipment purchases c. cash payments for raw materials d. foregone rent on office space owned and used by the firm ANSWER: d foregone rent on office space owned and used by the firm SECTION: 1 OBJECTIVE: 1 2. Samantha has been working for a law firm and earning an annual salary of $90,000. She decides to open her  own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000  for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her  start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of  $1,000. Assuming that there are no additional expenses, Samantha’s annual implicit costs will equal a. $55,200. b. $221,400. c. $91,000. d. $146,200. ANSWER: a $55,200. SECTION: 1 OBJECTIVE: 1 3. Economists assume that the goal of the firm is to maximize a. total revenue. b. profits. c. costs. d. All of the above are correct. ANSWER: b maximize profits. SECTION: 1 OBJECTIVE: 1 4. The difference between accounting profit and economic profit relates to a. the manner in which revenues are defined. b. how total revenue is calculated. c. the manner in which costs are defined. d. the price of the good in the market. ANSWER: c the manner in which costs are defined. SECTION: 1 OBJECTIVE: 1 75
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76 Chapter 13/The Costs of Production 5. In this diagram, the shift in the total product curve represents an increase in the firm’s  a. costs of production. b. productivity. c. diseconomies. d. market share. ANSWER: b productivity. SECTION: 2 OBJECTIVE: 2 6. Which of the following could explain why the total product curve shifted in this diagram? a. A reduction in capital equipment available to the firm. b. Labor skills have become rusty and outdated in the firm. c. The firm has developed new technology in their production facility. d. The firm is now receiving a higher price for its product. ANSWER: c
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CHAPTER 13 - Chapter13 1 a b c d ANSWER:d

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