studyguideexam3 (4) - Study Guide for Exam 3 Chapters 9, 10...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Study Guide for Exam 3 – Chapters 9, 10 and 11 1. Costs to an economist: A) consist only of explicit costs. B) may or may not involve monetary outlays. C) never reflect monetary outlays. D) always reflect monetary outlays. 2. To the economist total cost includes: A) explicit and implicit costs, including a normal profit. B) neither implicit nor explicit costs. C) implicit, but not explicit, costs. D) explicit, but not implicit, costs. 3. Implicit and explicit costs are different in that: A) explicit costs are relevant only in the short run. B) implicit costs are relevant only in the short run. C) the latter refer to nonexpenditure costs and the former to out-of-pocket costs. D) the former refer to nonexpenditure costs and the latter to out-of-pocket costs. 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. 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. 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) the average profitability of an industry over the preceding 10 years. 7. Which of the following definitions is correct ? A) Accounting profit + economic profit = normal profit. B) Economic profit - accounting profit = explicit costs. C) Economic profit = accounting profit - implicit costs. D) Economic profit - implicit costs = accounting profits. 8. Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting: A) profits were $100,000 and its economic profits were zero. Page 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
B) losses were $500,000 and its economic losses were zero. C) profits were $500,000 and its economic profits were $1 million. D) profits were zero and its economic losses were $500,000. Use the following to answer questions 9-16: Use the following cost information for the Creamy Crisp Donut Company to answer questions 16-23: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000 Utilities (electricity, water, disposal) costs = $8,000 Entrepreneur's potential economic profit from the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 9. Refer to the above data. Creamy Crisp's explicit costs are:
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/04/2011 for the course ECON 102 taught by Professor Gini during the Spring '11 term at Salt Lake Community College.

Page1 / 35

studyguideexam3 (4) - Study Guide for Exam 3 Chapters 9, 10...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online