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Please answer these questions Question 1 Economists assume the principal motivation of producers is:

  Psychological gratification. 

  Social status. 

  Profit. 

  Their preference for being "their own person."

 

Question 2

Profit is:

  TR - FC. 

  Q × (P - AVC). 

  (P × Q) - TC. 

  All of the above. 

 


Question 3

Profit is defined as:

  The earnings to all the factors of production that are employed. 

  Economic profit plus accounting profit. 

  The sum of total revenue and total cost. 

  The difference between total revenue and total cost. 

 

Question 4

Explicit costs:

  Include only payments to entrepreneurship. 

  Are the sum of actual monetary payments made for resources used to produce a good. 

  Include the market value of all resources used to produce a good. 

  Are the total opportunity costs of resources used to produce a good. 

 


Question 5

Implicit costs:

  Include only payments to entrepreneurship. 

  Represent actual monetary payments made for resources used to produce a good. 

  Are the costs to produce a good for which not direct payment is made. 

  Are the total opportunity costs of resources used to produce a good. 

 

Question 6

Accounting costs and economic costs differ because:

  Accounting costs exceed economic costs whenever any factor is not paid an explicit wage. 

  Accounting costs include implicit costs and economic costs do not. 

  Economic costs include the opportunity costs of all resources used while accounting costs include actual dollar outlays. 

  Accounting costs include explicit costs and economic costs do not. 

 


Question 7

Economic profit:

  Is greater than accounting profit by the amount of implicit cost. 

  Is greater than accounting profit by the amount of explicit cost. 

  Is less than accounting profit by the amount of implicit cost. 

  Is less than accounting profit by the amount of explicit cost. 

 


Question 8

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What are the annual accounting costs for the firm described above?

  $400,000. 

  $275,000. 

  $255,000. 

  $310,000. 

 


Question 9

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What are the annual explicit costs for the firm described above?

  $310,000. 

  $400,000. 

  $275,000. 

  $255,000. 

 


Question 10

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What are the annual implicit costs for the firm described above?

  $50,000. 

  $75,000. 

  $90,000. 

  $310,000. 

 


Question 11

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What are the annual economic costs for the firm described above?

  $310,000. 

  $275,000. 

  $255,000. 

  $400,000. 

 

Question 12

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What is the accounting profit for the firm described above?

  Loss of $10,000. 

  $10,000. 

  Loss of $80,000. 

  $80,000. 

 

Question 13

Suppose a firm has an annual budget of $150,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner-manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $320,000 per year. Answer the indicated questions on the basis of this information. What is the economic profit for the firm described above?

  Loss of $10,000. 

  $10,000. 

  Loss of $80,000. 

  $80,000. 

 

Question 14

A perfectly competitive firm is a price taker because:

  It has no control over the selling price of its product. 

  It has market power. 

  Market demand is downward sloping. 

  Its product are differentiated. 

 

Question 15

If a perfectly competitive firm can sell 200 computers at $700 each, in order to sell one more computer, the firm:

  Must lower its price. 

  Can raise its price. 

  Can sell the 201st computer at $700. 

  Cannot sell an additional computer at any price because the market is at equilibrium. 

 

Question 16

A competitive firm is one:

  That has a large advertising budget. 

  Whose output is so small relative to the market supply that it has no effect on market price. 

  That can alter the market price of the good(s) it produces. 

  That can raise price to increase profit. 

 

Question 17

Which of the following is true about the demand curve confronting a competitive firm?

  Horizontal, as is market demand. 

  Horizontal, while market demand is downward-sloping. 

  Downward-sloping, while market demand is flat. 

  Downward-sloping as in market demand. 

 

Question 18

Which of the following is a production decision?

  What output the firm should produce in the long run. 

  What output the firm should produce in the short run. 

  Whether the firm should exit or enter the market. 

  All of the above. 

 

Question 19

Total revenue for the competitive firm is equal to:

  P × Q. 

  Economic costs + economic profit. 

  MR × Q. 

  All of the above. 

 

Question 20

The fact that a perfectly competitive firm's total revenue curve is an upward-sloping straight line implies that:

  The total profit curve is also an upward-sloping straight line. 

  Product price is constant at all levels of output. 

  Product price decreases as output increases and demand is elastic. 

  Product price increases at all output levels. 

 

Question 21

If a perfectly competitive firm wanted to maximize its total revenues, it would produce:

  The output where MC equals price. 

  As much as it is capable of producing. 

  The output where the ATC curve is at a minimum. 

  The output where the marginal cost curve is at a minimum. 

 


Question 22

Fixed costs:

  Occur in the short run but not in the long run. 

  Occur even at zero output in the short run. 

  Do not change when the rate of output changes. 

  All of the above. 

 

Question 23

Which of the following represents the change in total revenue that results from a 1-unit increase in the quantity sold?

  Marginal cost. 

  Total revenue. 

  Marginal profit. 

  Marginal revenue. 

 

Question 24

For the perfectly competitive firm, the marginal revenue is always:

  Below the firm's demand curve.

  Equal to the market price. 

  Equal to marginal cost. 

  Declining. 

 

Question 25

Short-run profits are maximized, for a perfectly competitive firm, at the rate of output where:

  Average total costs are minimized. 

  Total revenue is maximized. 

  Marginal revenue is zero. 

  Marginal revenue is equal to marginal cost. 

 

Question 26

If a perfectly competitive firm is producing a rate of output for which MC exceeds price, then the firm:

  Must have an economic loss. 

  Can increase its profit by increasing output. 

  Can increase its profit by decreasing output. 

  Is maximizing profit. 

 

Question 27

If price is greater than marginal cost, a perfectly competitive firm should increase output because:

  Marginal costs are increasing. 

  Additional units of output will add to the firm's profits (or reduce losses).

  The price they receive for their product is increasing. 

  Total revenues would increase. 

 

Question 28

Profit per unit equals:

  (TR - TC) ÷ Q. 

  (P - ATC) × Q. 

  Profit × Q. 

  All of the above. 

 

Question 29

A firm experiencing economic losses will still continue to produce output in the short run as long as:

  Revenues are greater than total fixed cost. 

  Price is above average variable cost. 

  MR = MC. 

  All of the above. 

 

Question 30

The shutdown point (short run) occurs where:

  P = minimum of MR. 

  P = minimum of AFC. 

  P = minimum of AVC. 

  P = minimum of ATC. 

 

Question 31

The long run is:

  A time period longer than 1 year. 

  The time period required to produce a unit of the firm's output.

  A period of time long enough for all inputs to be variable. 

  Approximately one year. 

Question 32

If in the long run price is greater than average total costs then:

  A typical firm will break even and should maintain existing capacity and there is no entry or exit in the industry. 

  A typical firm will incur a loss and should reduce capacity and or exit the industry. 

  A typical firm will enjoy profits and should expand capacity and or enter the industry. 

  None of the above 

Question 33

If in the long run price is equal to average total costs then:

  A typical firm will break even and should maintain existing capacity and there is no entry or exit in the industry. 

  A typical firm will incur a loss and should reduce capacity and or exit the industry. 

  A typical firm will enjoy profits and should expand capacity and or enter the industry. 

  None of the above 

Question 34

For a competitive market in the long run:

  Economic profits induce firms to enter until profits are normal. 

  Economic losses induce firms to exit until profits are normal. 

  Economic profit is zero at equilibrium. 

  All of the above. 

Step-by-step answer

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Subject: Business, Economics

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