Ch 12
Name: ________________________ Class: ___________________ Date: __________
ID: A
CH 12
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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1. The fundamental goal of a firm is
a. different for each firm.
b. to make a quality product.
c. to maximize profit.
d. to gain market share.
e. decrease its employment of workers in order to cut its costs.
2. Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and other variable costs were
$20,000. Lauren could have worked as a biologist and earned $50,000 per year. An economist calculates her implicit costs as
a. $150,000.
b. $63,000.
c. $50,000.
d. $110,000.
e. $0 because Lauren did not work as a biologist.
3. Which of the following is(are) an explicit cost in Jim's business venture?
a. the salary Jim could have earned at another job
b. the interest Jim does not earn because he invested his savings in his business
c. the wages Jim pays his workers
d. Jim's normal profit
e. Answer A, answer B, and answer D are correct.
4. A cost incurred in the production of a good or service and for which the firm does not need to make a direct monetary payment, is referred to as ____ cost.
a. a minimized
b. a maximized
c. an explicit
d. an implicit
e. an invisible
5. An implicit cost is
a. when a money payment is made only because a factor of production is used.
b. when a factor of production is used but a money payment is not made.
c. when a money payment is made.
d. not relevant to an entrepreneur's decision making.
e. considered part of the owner's economic profit.
6. Suppose Billy owns a hair salon in Dallas. He has one large hair dryer for which he paid $1,000. If he can sell the dryer one year later for $800, his total economic depreciation equals
a. $1,000.
b. $200.
c. $800.
d. $500.
e. None of the above answers are
ID: A
CH 12
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
____
____
____
____
____
1. The fundamental goal of a firm is
a. different for each firm.
b. to make a quality product.
c. to maximize profit.
d. to gain market share.
e. decrease its employment of workers in order to cut its costs.
2. Lauren runs a chili restaurant in San Francisco. Her total revenue last year was $110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, and her materials, food and other variable costs were
$20,000. Lauren could have worked as a biologist and earned $50,000 per year. An economist calculates her implicit costs as
a. $150,000.
b. $63,000.
c. $50,000.
d. $110,000.
e. $0 because Lauren did not work as a biologist.
3. Which of the following is(are) an explicit cost in Jim's business venture?
a. the salary Jim could have earned at another job
b. the interest Jim does not earn because he invested his savings in his business
c. the wages Jim pays his workers
d. Jim's normal profit
e. Answer A, answer B, and answer D are correct.
4. A cost incurred in the production of a good or service and for which the firm does not need to make a direct monetary payment, is referred to as ____ cost.
a. a minimized
b. a maximized
c. an explicit
d. an implicit
e. an invisible
5. An implicit cost is
a. when a money payment is made only because a factor of production is used.
b. when a factor of production is used but a money payment is not made.
c. when a money payment is made.
d. not relevant to an entrepreneur's decision making.
e. considered part of the owner's economic profit.
6. Suppose Billy owns a hair salon in Dallas. He has one large hair dryer for which he paid $1,000. If he can sell the dryer one year later for $800, his total economic depreciation equals
a. $1,000.
b. $200.
c. $800.
d. $500.
e. None of the above answers are