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chapter8 practice questions

chapter8 practice questions - Chapter 8 1 Which of the...

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Chapter 8 1. Which of the following is not an example of explicit costs? A) Wages paid to workers B) Personal savings of the owner invested in the firm C) Salaries paid to management D) Office space rent 2. If you were to start your own business, your implicit costs would include A) rent that you have paid in advance for use of a building. B) the opportunity cost of your time. C) profit over and above normal profit D) interest that you pay on your business loans. 3. Suppose you quit your job to start a business. In the first month, your total revenue was $6,000. You paid $1,000 in monthly rent for office space. $ 200 in monthly rent for equipment. $3,000 to your workers in wages for the month. $1,000 for the supplies you used that month. You determine that your true profit that month was negative $200. Why? 4. If a firm is earning zero economic profits Use the following to answer questions 5-10: Chris was the business manager for a real estate firm earning an annual salary of $40,000. Then Chris decided to become a consultant. Chris hired an administrative assistant at $15,000 per year and rents office space (utilities included) for $3,000 per month. Chris earned $100,000 in total revenue the first year. 1
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5. What is Chris's explicit annual cost? 6. What is Chris's implicit cost? A) $15,000 B) $18,000 C) $36,000 D) $40,000 7. Chris's opportunity cost of running her own business is______ which is the_______. 8. Chris's accounting profit is _______. 9. Chris's economic profit is _______.
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