question
Accounting profit is equal to
A. marginal revenue minus marginal cost
B. total revenue minus the explicit cost of producing goods and services
C. total revenue minus the opportunity cost of producing goods and services
D. average revenue minus average cost of producing the last unit of a good or service
A. marginal revenue minus marginal cost
B. total revenue minus the explicit cost of producing goods and services
C. total revenue minus the opportunity cost of producing goods and services
D. average revenue minus average cost of producing the last unit of a good or service
answer
B total revenue minus the explicit cost of producing goods and services
question
Zach took $400,000 out of the bank and used it to start his new cookie business. The bank account pays 3 percent interest per year. during the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000
A. $12,000
B. $-494,000
C. $-6,000
D. $6,000
A. $12,000
B. $-494,000
C. $-6,000
D. $6,000
answer
D. $6,000
question
Tony is a wheat farmer, but he also spends part of his day teaching guitar lessons. due to the popularity of his local country western band, Farmer tony has more students requesting lessons than he has time for if he is to also maintain his farming business. Farmer Tony charges $25 an hour for his guitar lessons. One spring day, he spends 10 hours in his fields planting $130 worth of seeds on his farm. He expects that the seed he planted will yield $300 worth of wheat
A. 130
B. 260
C. 170
D. $-80
A. 130
B. 260
C. 170
D. $-80
answer
C. 170
question
Total revenue minus explicit and implicit costs is called
A. fixed expenses
B. economic profit
C. accounting profit
D. average total cost
A. fixed expenses
B. economic profit
C. accounting profit
D. average total cost
answer
B. economic profit
question
Which of these assumptions is often realistic for a firm in the short run
A. the firm can vary the number of workers it employs, but not the size of its factory
B. the firm can vary both the size of its factory and the number of workers it employs
C. the firm can vary neither the size of its factory nor the number of workers it employs
D. the firm can vary the size of its factory, but not the number of workers it employs
A. the firm can vary the number of workers it employs, but not the size of its factory
B. the firm can vary both the size of its factory and the number of workers it employs
C. the firm can vary neither the size of its factory nor the number of workers it employs
D. the firm can vary the size of its factory, but not the number of workers it employs
answer
A. the firm can vary the number of workers it employs, but not the size of its factory
question
If marginal cost is below average total cost, then average total cost
A. may rise or fall depending on the size of fixed costs
B. is rising
C. is constant
D. is falling
A. may rise or fall depending on the size of fixed costs
B. is rising
C. is constant
D. is falling
answer
D. is falling
question
For a large firm that produces and sells automobiles, which of the following costs would be a variable cost
A. the rent that the firm pays for office space in a suburb of St. Louis
B. the cost of the steel that is used in producing automobiles
C. the $20 million payment that the firm pays each year for accounting services
D. all of the above are correct
A. the rent that the firm pays for office space in a suburb of St. Louis
B. the cost of the steel that is used in producing automobiles
C. the $20 million payment that the firm pays each year for accounting services
D. all of the above are correct
answer
B. the cost of the steel that is used in producing automobiles
question
For Firm A, when 4 units of labor, the only variable input into the production process, are hired, the firm produces 50 units of output. If the fixed cost of production is $4, the variable cost per unit of labor is $20, and the marginal product of labor for the fifth unit of labor is 2, what is the average total cost of production when labor is 5 units
A. 22.80
B. 20.00
C. 20.80
D. 2.00
A. 22.80
B. 20.00
C. 20.80
D. 2.00
answer
D. 2.00
question
When the average cost is greater than marginal cost, marginal cost must be
A. rising
B. falling
C. the direction of change in marginal cost cannot be determined from this information
D. constant
A. rising
B. falling
C. the direction of change in marginal cost cannot be determined from this information
D. constant
answer
C. the direction of change in marginal cost cannot be determined from this information
question
Franco's Pizza Parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of marking 499 pizzas is $3.30, then
A. totals cost are falling at Q= 500
B. average costs are rising at Q= 500
C. average variable costs must be falling
D. average costs are falling at Q=500
A. totals cost are falling at Q= 500
B. average costs are rising at Q= 500
C. average variable costs must be falling
D. average costs are falling at Q=500
answer
B. average costs are rising at Q= 500
question
The length of the short run
A. is always less than 6 month
B. is different for different types of firms
C. can never exceed 3years
D. can never exceed 1 year
A. is always less than 6 month
B. is different for different types of firms
C. can never exceed 3years
D. can never exceed 1 year
answer
B. is different for different types of firms
question
when, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of
A. fixed costs greatly exceeding variable costs
B. diseconomies of scale
C. economies of scale
D. coordination problems arising from the large size of the firm
A. fixed costs greatly exceeding variable costs
B. diseconomies of scale
C. economies of scale
D. coordination problems arising from the large size of the firm
answer
C. economies of scale
question
The long run for Firm A, total cost is $105 when output is 3 units and $120 when output is 4 units. Does Firm A exhibit economies or diseconomies of scale?
A. diseconomies of scale, since total cost is rising as output rises
B. Diseconomies of scale, since average total cost is falling as output rises
C. economies of scale, since average total cost is falling as output rises
D. economies of scale, since total cost is rising as output rises
A. diseconomies of scale, since total cost is rising as output rises
B. Diseconomies of scale, since average total cost is falling as output rises
C. economies of scale, since average total cost is falling as output rises
D. economies of scale, since total cost is rising as output rises
answer
C. economies of scale, since average total cost is falling as output rises
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