question
The difference between the market price of a new car used by a firm in the market price of the same car one year later is known as
answer
Economic depreciation
question
A firm's opportunity cost ________.
answer
Include the cost of using resources owned by the firm
question
Joe quit his job as an insurance agent opens his own sporting good store. If his profits as measured by his accountant are greater than zero, then
answer
There is not enough information to determine his economic profit, if any.
question
Sheila's sport shop is a very popular sporting good store, which has a yearly revenue of $600,000. Sheila runs the business herself. Her alternative employment options are to be a college swimming coach for $50,000 per year or a construction worker for $40,000 per year. Sheila spends $230,000 purchasing goods for resale to her customers. She also has four employees, who each earn $25,000 per year. Sheila owns the building that her sports shop is housed in and she could have rented it out for $20,000 per year. She was economic profit is equal to
answer
$200,000 per year
question
Electrician quits her current job, which pays $40,000 per year. She can take a job with another firm for $45,000 per year or work for herself. The opportunity cost of working for herself is
answer
$45,000
question
Economic profit is
answer
Equal to the ferns total revenue minus it's opportunity costs
question
Which of the following costs are part of a firm's opportunity cost?
I. Costs for resources bought in markets
II. Costs for resources the firm owns
III. Costs for resources supplied by the owner
I. Costs for resources bought in markets
II. Costs for resources the firm owns
III. Costs for resources supplied by the owner
answer
I, II, III
question
The return that an entrepreneur can't expect to earn, on average, is called
answer
Normal profit
question
Which of the following are two components of the opportunity cost of using capital already owned by the firm?
answer
Economic depreciation in forgone interest
question
A firm's basic goal is best described as
answer
maximizing profit
question
Among the opportunity cost of a firm are all of the following except
answer
Economic profits
question
If economic profit is equal to zero, then
answer
The entrepreneur is making only a normal profit
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