question
Profit is designed as total revenue
answer
Minus total cost
question
Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements
answer
Shoe polish
rent on the shoe stand
(things used to make the business possible)
rent on the shoe stand
(things used to make the business possible)
question
A difference between explicit and implicit costs is that
answer
Implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do
question
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,00. She withdraws $100,000 form her personal savings account. The interest rate on the loan is 6% & the interest rate on her savings act is 2%
-Emily's explicit cost of capital is..
-Emily's explicit cost of capital is..
answer
$12,000
question
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,00. She withdraws $100,000 form her personal savings account. The interest rate on the loan is 6% & the interest rate on her savings act is 2%
-Emily's implicit cost of capital is..
-Emily's implicit cost of capital is..
answer
$2,000
question
a production function is a relationship between inputs and..
answer
quantity of output
question
The marginal product of an input in the production process is the increase in..
answer
quantity of output obtained from an additional unit of that input
question
In the long run
answer
inputs that were fixed in the short run become variable
question
Economies of scale occur when
answer
long-run average total costs fall as output increases
question
Which of the following is a characteristic of a competitive market?
answer
Buyers and sellers are price takers
question
If a firm in a competitive market doubles its number of units sold, total revenue for the firm will
answer
double
question
suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each, Which of the following statements is correct
answer
Marginal revenue EQUALS $3
question
Laura is a gourmet chef who runs a small catering business in a competitive industry. Laura specializes in making wedding cakes. Laura sells 20 wedding cakes per month. Her monthly total revenue is $5,000. The marginal cost of making a wedding cake is $200. In order to maximize profits, Laura should...
answer
make more than 20 wedding cakes per month
question
When price is greater than marginal cost for a firm in a competitive market,
answer
there are opportunities to increase profit by increasing production
question
In order to maximize profits in the short run, a firm should produce where
answer
marginal cost equals marginal revenue
question
Mrs. Smith is operating a firm in a competitive market, the market price is $6.50. At her profit-maximizing level of output, her average total cost of production is $7.00, ad her average variable cost of production is at $6.00. Which of the following statements about Mrs. Smith's firm is correct?
answer
Mrs. Smith is earning a loss but should continue to operate in the short run
question
Which of the following represents the firm's long-run condition for exiting a market
answer
exit if P<ATC
question
The exit of existing firms from a competitive market will
answer
decrease market supply and increase market price
question
In a perfectly competitive market, the process of entry and exit will end when
answer
economic profits are zero
question
When entry and exit behavior of firms in an industry does not affect a firm's cost structure,
answer
the long-run market supply curve must be horizontal
question
The competitive firm's short-run supply curve is that portion of the
answer
marginal cost curve that lies above average variable cost
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