CH 7 - The Competitive Firm

CH 7 - The Competitive Firm - ch7 Student:

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Unformatted text preview: ch7 Student: _______________________________________________________________________________________ 1. Which of the following is the best explanation for why individuals own small businesses? A. Because they cannot earn a living working for Corporate America. B. To provide a product consumers want. C. The expectation of profit. D. To gain experience for their next job. 2. Economists assume the principal motivation of producers is: A. Psychological gratification. B. Social status. C. Profit. D. Their preference for being "their own person." 3. Profit: A. Is the difference between total revenue and total cost. B. Is the difference between variable costs and fixed costs. C. Is always a number greater than zero. D. Must be reported to Wall Street quarterly. 4. Profit is the residual that flows to: A. Managers. B. Consultants. C. Stockholders. D. Bondholders. 5. Profit is: A. TR - VC. B. P (Q - AVC). C. (P Q) - TC. D. (Q-ATC) P. 6. Profit is defined as: A. The earnings to all the factors of production that are employed. B. Economic profit plus accounting profit. C. The sum of total revenue and total cost. D. The difference between total revenue and total cost. 7. In an effort to earn a profit, businesses are likely to: A. Produce the least amount of pollution possible. B. Restrict competition when possible. C. Provide the safest working conditions possible. D. Encourage competitors to enter the market. 8. The profit motive can encourage businesses to do all of the following except : A. Pollute the environment. B. Restrict competition. C. Provide unsafe working conditions. D. Maximize social welfare. 9. Market outcomes are orchestrated by: A. The Federal Reserve. B. The profit motive. C. Congress. D. Consumers only. 10. The best measure of the economic cost of doing your homework is: A. The most valuable opportunity you give up when you do your homework. B. The amount you would have to pay to get someone else to do it. C. The economic cost plus the accounting cost of doing the homework. D. The tuition paid for your education plus the cost of any required textbooks. 11. All of the following are ways a business can earn economic profits except: A. Discover new products. B. Maximize implicit costs, but not explicit costs. C. Take above-average risks. D. Find new and better methods of production. 12. Many business firms understate true costs because they fail to take into account: A. Fixed costs. B. Explicit costs. C. Implicit costs. D. Research and development costs. 13. Most businesses count ________ costs, but do not consider ________ costs. A. Variable costs; fixed costs. B. Fixed costs; variable costs. C. Explicit; implicit. D. Implicit; explicit....
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This note was uploaded on 09/18/2011 for the course WR 227 taught by Professor U.nknown during the Spring '10 term at Portland State.

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CH 7 - The Competitive Firm - ch7 Student:

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