# microch7 - PrinciplesofMicroeconomics,8e(Case/Fair)

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Principles of Microeconomics, 8e (Case/Fair) Chapter 7: The Production Process: The Behavior of Profit - Maximizing Firms 1. Total revenue minus total cost is equal to A) the rate of return. B) marginal revenue. C) profit. D) net cost. Answer: C 2. If economic profit is zero, a firm A) earns a negative rate of return. B) will leave the industry. C) earns a positive but below normal rate of return. D) earns exactly a normal rate of return. Answer: D Refer to the information provided in Figure 7.2 below to answer the following  questions.                                             Figure 7.2 3.  Refer to Figure 7.2. This corn producer produces 100 bushels of corn and sells  each bushel at \$5. The cost of producing each unit bushel is \$2. This corn  producer's total revenue is    A) \$20.   B) \$200.   C) \$300.   D) \$500.   Answer:  D 4. You own a building that has four possible uses: a cafe, a craft store, a hardware store, and a bookstore. The value of the building in each use is \$2,000; \$3,000; \$4,000; and \$5,000, respectively. You decide to open a hardware store. The opportunity cost of using this building for a hardware store is A) \$2,000, the value if the building is used as a cafe. B) \$3,000, the value if the building is used as a craft store. C) \$10,000, the sum of the values if the building is used for a cafe, a craft store, or a

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bookstore. D) \$5,000, the value if the building is used for a bookstore. Answer: D SCENARIO 1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of \$90,000. Your costs for equipment, rent, and supplies were \$60,000. To start this business you invested an amount of your own capital
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## This note was uploaded on 12/27/2011 for the course FBAE 201 taught by Professor Eefwf during the Spring '11 term at Institute of Technology.

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microch7 - PrinciplesofMicroeconomics,8e(Case/Fair)

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