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Unformatted text preview: e, even if it means incurring a higher total cost.
(iii)
revenues as large as possible, even if it reduces profits.
a.
b.
c.
d. (i) and (ii) are true.
(i) and (iii) are true.
(ii) and (iii) are true.
(i), (ii), and (iii) are true. 4. An entrepreneur’s motivation to start a business arises from
a. an innate love for the type of business that he or she starts.
b. a desire to earn a profit.
c. an altruistic desire to provide the world with a good product.
d. All of the above could be correct. 5. Economists normally assume that the goal of a firm is to
a. maximize its total revenue.
b. maximize its profit.
c. minimize its explicit costs.
d. minimize its total cost. 6. Economists assume that the goal of the firm is to maximize total
a. revenue.
b. profits.
c. costs.
d. satisfaction. 7. Kirsten sells 300 glasses of lemonade at $0.50 each. Her total costs are $125. Her profits are
a. $25.
b. $124.50.
c. $125. d. $150.
8. Zoe sells 200 glasses of lemonade at $0.50 each. Her total costs are $25. Her profits are
a. $25.
b. $75.
c. $100.
d. $175. 9. XYZ corporation produced 300 units of output but sold only 275 of the units it produced. The
average cost of production for each unit of output produced was $100. Each of the 275 units sold
was sold for a price of $95. Total profit for the XYZ corporation would be
a. $3,875.
b. $26,125.
c. $28,500.
d. $30,000. 10. Those things that must be forgone to acquire a good are called
a. implicit costs.
b. opportunity costs.
c. explicit costs.
d. accounting costs.
11. Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells
at the local farmer’s market. One day she spends 5 hours planting $50 worth of seeds in her garden.
Once the seeds have grown into flowers, she can sell them for $150 at the farmer’s market. Which
of the following statements is correct regarding Katherine’s profits from selling flowers?
a. Katherine’s accounting profits are $100, and her economic profits are $25.
b. Katherine’s accounting profits are $100, and her economic profits are $75.
c. Katherine’s accounting profits are $25, and her economic profits are $100.
d. Katherine’s accounting profits are $75, and her economic profits are $125.
12. Katherine gives piano lessons for $20 per hour. She also grows flowers, which she arranges and
sells at the local farmer’s market. One day she spends 5 hours planting $50 worth of seeds in her
garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer’s market.
Which of the following statements is correct regarding Katherine’s profits from selling flowers?
a. Katherine’s accounting profits are $100, and her economic profits are $100.
b. Katherine’s accounting profits are $100, and her economic profits are $0.
c. Katherine’s accounting profits are $0, and her economic profits are $100.
d. Katherine’s accounting profits are $0, and her economic profits are $100.
13. A certain firm manufactures and sells computer chips....
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This note was uploaded on 01/27/2014 for the course ECON 1010 taught by Professor Jonathanpritchett during the Fall '12 term at Tulane.
 Fall '12
 JonathanPritchett
 Economics

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