Econ2TEST4
Econ2TEST4
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?
a.
Wilson paid $120 for an outside laundry service to clean the towels used at the club.
b.
Wilson paid $100 for the pest control exterminator to spray the health club.
c.
Wilson previously worked as an accountant, earning $3,000 a month.
d.
Wilson usually eats four hamburgers a day, priced at $3 each.
____ 2. Which of the following is true?
a.
Economists calculate only economic profit, and accountants calculate only accounting profit.
b.
Economic profit is always greater than accounting profit.
c.
Accounting profit is the difference between total revenue and explicit costs.
d.
Economic profit is the difference between total revenue and implicit costs.
____ 3. Consider the following information about a business Diane opened last year: price = $5, quantity sold = 12,000; implicit cost = $17,000; explicit cost = $40,000. What was Diane's economic profit?
a.
$20,000
b.
$3,000
c.
$6,000
d.
$43,000
e.
There is not enough information provided to answer this question.
____ 4. Consider the following information about a business Diane opened last year: price = $5, quantity sold = 12,000; implicit cost = $17,000; explicit cost = $40,000. What was Diane's accounting profit?
a.
$20,000
b.
$3,000
c.
$6,000
d.
$43,000
e.
There is not enough information provided to answer this question.
____ 5. If a firm earns normal profit, then it has generated revenues
a.
equal to the sum of implicit and explicit costs.
b.
greater than total opportunity costs.
c.
sufficient to cover explicit costs, but not implicit costs.
d.
sufficient to cover implicit costs, but not explicit costs.
____ 6. Fixed costs
a.
are equal to explicit costs plus implicit costs.
b.
do not vary with output.
c.
are the same as total costs for any level of output greater than
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?
a.
Wilson paid $120 for an outside laundry service to clean the towels used at the club.
b.
Wilson paid $100 for the pest control exterminator to spray the health club.
c.
Wilson previously worked as an accountant, earning $3,000 a month.
d.
Wilson usually eats four hamburgers a day, priced at $3 each.
____ 2. Which of the following is true?
a.
Economists calculate only economic profit, and accountants calculate only accounting profit.
b.
Economic profit is always greater than accounting profit.
c.
Accounting profit is the difference between total revenue and explicit costs.
d.
Economic profit is the difference between total revenue and implicit costs.
____ 3. Consider the following information about a business Diane opened last year: price = $5, quantity sold = 12,000; implicit cost = $17,000; explicit cost = $40,000. What was Diane's economic profit?
a.
$20,000
b.
$3,000
c.
$6,000
d.
$43,000
e.
There is not enough information provided to answer this question.
____ 4. Consider the following information about a business Diane opened last year: price = $5, quantity sold = 12,000; implicit cost = $17,000; explicit cost = $40,000. What was Diane's accounting profit?
a.
$20,000
b.
$3,000
c.
$6,000
d.
$43,000
e.
There is not enough information provided to answer this question.
____ 5. If a firm earns normal profit, then it has generated revenues
a.
equal to the sum of implicit and explicit costs.
b.
greater than total opportunity costs.
c.
sufficient to cover explicit costs, but not implicit costs.
d.
sufficient to cover implicit costs, but not explicit costs.
____ 6. Fixed costs
a.
are equal to explicit costs plus implicit costs.
b.
do not vary with output.
c.
are the same as total costs for any level of output greater than