Choose the most correct answer for each question. Each question is worth 1/2 poi
ID: 1241397 • Letter: C
Question
Choose the most correct answer for each question. Each question is worth 1/2 point.1. Implicit and explicit revenues minus implicit and explicit costs equals:
A. accounting profit.
B. economic profit.
C. zero profit.
D. implicit profit.
2. A business owner makes 50 items by hand in 6 hours. She could have earned $10 an hour working for someone else. If each item sells for $5 and the explicit costs total $14, economic profit equals:
A. $0.
B. $64.
C. $176.
D. $236.
3. Can accounting profit be positive, while economic profits are negative?
A. No. The two concepts are identical.
B. Yes, if total revenue covers opportunity costs but not explicit costs.
C. Yes, if total revenue covers explicit costs but not opportunity costs.
D. No. Economic profits must always be larger than accounting profits.
4. The short run is a period during which:
A. some inputs are variable and no inputs are fixed.
B. some inputs are variable and some inputs are fixed.
C. no inputs are variable and all inputs are fixed.
D. no inputs are variable and some inputs are fixed.
5. Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.
C. A business consulting firm is considering whether or not to hire some interns to assist with research and data-processing.
D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.
6. Which of the following is an example of a short-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce.
C. A business consulting firm is considering whether or not to open a new office in another city where many of its clients are based.
D. A business consulting firm is considering whether or not to hire new consultants, move to a larger space, and purchase additional equipment.
Explanation / Answer
1. B. economic profit.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
2. C. $176. ($250-(60+14))
3. C. Yes, if total revenue covers explicit costs but not opportunity costs.
4. B. some inputs are variable and some inputs are fixed.
5. A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
6. B. An automobile manufacturing company is considering whether or not to expand its existing workforce.