Question 1

Sidney Crosby's economic rent from playing hockey in the NHL is equal to the difference between his

Accepted Answer

A)  initial offer and his final salary. 
B)  initial offer and his team's initial offer. 
C)  final salary and the least he would be willing to accept to play in the NHL. 
D)  final salary and the average for players in the NHL. 
E)  final salary and his team's initial offer. 
A)  initial offer and his final salary. 
B)  initial offer and his team's initial offer. 
C)  final salary and the least he would be willing to accept to play in the NHL. 
D)  final salary and the average for players in the NHL. 
E)  final salary and his team's initial offer. C

Question 2

If the owners of a business are receiving total revenue sufficient to cover all their explicit and implicit costs,they are

Accepted Answer

A)  earning positive economic profit. 
B)  earning a normal profit. 
C)  earning economic losses. 
D)  doing better than their next-best alternative. 
E)  doing worse than their next-best alternative. 
A)  earning positive economic profit. 
B)  earning a normal profit. 
C)  earning economic losses. 
D)  doing better than their next-best alternative. 
E)  doing worse than their next-best alternative. B

Question 3

Generally,______ motivate firms to enter an industry,while ______ motivate firms to exit an industry.

Accepted Answer

A)  economic profits;economic losses 
B)  accounting profits;accounting losses 
C)  accounting profits;economic losses 
D)  economic profits;accounting losses 
E)  normal profits;normal losses 
A)  economic profits;economic losses 
B)  accounting profits;accounting losses 
C)  accounting profits;economic losses 
D)  economic profits;accounting losses 
E)  normal profits;normal losses A

Question 4

-Refer to the diagram above.The firm is experiencing diseconomies of scale when output is

Accepted Answer

A)  less than 18 units. 
B)  between 18 and 21 units. 
C)  greater than 21 units. 
D)  greater than 18 units. 
E)  less than 21 units. 
A)  less than 18 units. 
B)  between 18 and 21 units. 
C)  greater than 21 units. 
D)  greater than 18 units. 
E)  less than 21 units.

Question 5

A firm earning a normal profit

Accepted Answer

A)  should exit the industry. 
B)  will shut down. 
C)  has no incentive to leave the industry. 
D)  is covering explicit costs but not implicit costs. 
E)  is covering implicit costs but not explicit costs. 
A)  should exit the industry. 
B)  will shut down. 
C)  has no incentive to leave the industry. 
D)  is covering explicit costs but not implicit costs. 
E)  is covering implicit costs but not explicit costs.

Question 6

-Refer to the graph above.If a firm was originally producing on SATC3 but now desires to reduce its output to 600 units,in the short run it will use the plant size represented by

Accepted Answer

A)  SATC1. 
B)  SATC2. 
C)  SATC3. 
D)  SATC4. 
E)  SATC2 and SATC3. 
A)  SATC1. 
B)  SATC2. 
C)  SATC3. 
D)  SATC4. 
E)  SATC2 and SATC3.

Question 7

Right Panel: The market: a shift of short-run supply in response to an increase in demand.  
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the firm will charge ___ per bushel and produce ____thousand bushels of wheat per year.

Accepted Answer

A)  $1.10;10 
B)  $1.10;12 
C)  $1.12;12 
D)  $1.20;10 
E)  $1.20;12 
A)  $1.10;10 
B)  $1.10;12 
C)  $1.12;12 
D)  $1.20;10 
E)  $1.20;12

Question 8

Right Panel: The market: a shift of short-run supply in response to an increase in demand.  
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the total costs of the firm at the profit-maximizing output are equal to

Accepted Answer

A)  $1.10. 
B)  $1.20. 
C)  $11. 
D)  $11,000. 
E)  10,000 bushels. 
A)  $1.10. 
B)  $1.20. 
C)  $11. 
D)  $11,000. 
E)  10,000 bushels.

Question 9

-Refer to the diagram above.The firm is experiencing economies of scale when output is

Accepted Answer

A)  less than 18 units. 
B)  between 18 and 21 units. 
C)  greater than 21 units. 
D)  greater than 18 units. 
E)  less than 21 units. 
A)  less than 18 units. 
B)  between 18 and 21 units. 
C)  greater than 21 units. 
D)  greater than 18 units. 
E)  less than 21 units.

Question 10

Right Panel: The market: a shift of short-run supply in response to an increase in demand.  
-Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D' and SRS,respectively,the firm is making a profit of

Accepted Answer

A)  $0.20. 
B)  $0.80. 
C)  $240. 
D)  $960. 
E)  $1,000. 
A)  $0.20. 
B)  $0.80. 
C)  $240. 
D)  $960. 
E)  $1,000.

Question 11

-Use the data in the table above.The marginal revenue for each additional batch of five units of output is

Accepted Answer

A)  $1. 
B)  $5. 
C)  $25. 
D)  $25/Q. 
E)  unknown. 
A)  $1. 
B)  $5. 
C)  $25. 
D)  $25/Q. 
E)  unknown.

Question 12

If firms are exiting a perfectly competitive industry,this suggests that

Accepted Answer

A)  economic profit is zero. 
B)  accounting profit is zero. 
C)  accounting profit is negative. 
D)  there is normal profit. 
E)  economic profit is negative. 
A)  economic profit is zero. 
B)  accounting profit is zero. 
C)  accounting profit is negative. 
D)  there is normal profit. 
E)  economic profit is negative.

Question 13

The value of income received by a firm in return for supplying goods and services is called

Accepted Answer

A)  economic rent. 
B)  revenue. 
C)  accounting profit. 
D)  economic profit. 
E)  normal profit. 
A)  economic rent. 
B)  revenue. 
C)  accounting profit. 
D)  economic profit. 
E)  normal profit.

Question 14

If accounting profit is positive,then

Accepted Answer

A)  economic profit is also positive. 
B)  economic profit is either zero or positive. 
C)  the firm is receiving a normal profit. 
D)  economic profit can be negative,zero,or positive. 
E)  new firms must be entering the industry. 
A)  economic profit is also positive. 
B)  economic profit is either zero or positive. 
C)  the firm is receiving a normal profit. 
D)  economic profit can be negative,zero,or positive. 
E)  new firms must be entering the industry.

Question 15

Economic profit is

Accepted Answer

A)  the same as accounting profit. 
B)  equal to total revenue minus the sum of fixed and variable costs. 
C)  equal to total revenue minus both explicit and implicit costs. 
D)  greater than accounting profit. 
E)  only important to economists. 
A)  the same as accounting profit. 
B)  equal to total revenue minus the sum of fixed and variable costs. 
C)  equal to total revenue minus both explicit and implicit costs. 
D)  greater than accounting profit. 
E)  only important to economists.

Question 16

If economic profit is negative but accounting profit is positive,then

Accepted Answer

A)  accounting profit is less than implicit costs. 
B)  total revenue is greater than the sum of explicit and implicit costs. 
C)  explicit costs exceed total revenue. 
D)  normal profit is zero. 
E)  explicit costs equal implicit costs. 
A)  accounting profit is less than implicit costs. 
B)  total revenue is greater than the sum of explicit and implicit costs. 
C)  explicit costs exceed total revenue. 
D)  normal profit is zero. 
E)  explicit costs equal implicit costs.

Question 17

Superstar professional athletes can sustain their economic rents because

Accepted Answer

A)  team owners will pay anything to win the championship. 
B)  they have excellent union representation. 
C)  they are greedy and spoiled. 
D)  if their current team does not pay,they can take their unique talents to another team willing to pay. 
E)  their opportunity costs of playing are high. 
A)  team owners will pay anything to win the championship. 
B)  they have excellent union representation. 
C)  they are greedy and spoiled. 
D)  if their current team does not pay,they can take their unique talents to another team willing to pay. 
E)  their opportunity costs of playing are high.

Question 18

Suppose that Robert is willing to work for $10 per hour and receives an offer of $15 per hour.Robert's

Accepted Answer

A)  economic profit is $5 per hour. 
B)  economic rent is $5 per hour. 
C)  economic rent is $15 per hour. 
D)  economic profit is $15 per hour. 
E)  economic rent is $10 per hour. 
A)  economic profit is $5 per hour. 
B)  economic rent is $5 per hour. 
C)  economic rent is $15 per hour. 
D)  economic profit is $15 per hour. 
E)  economic rent is $10 per hour.

Question 19

Harvey quit his job at the University of Toronto where he earned $45,000 a year,the same as other employees of normal ability,the same as other employees of normal ability.But Harvey is unusually talented in another area,and he figures his entrepreneurial talent,or forgone entrepreneurial income,to be $5000 a year.He cashed in $100,000 in bonds that earned 10% interest annually to buy a software company,Extreme Gaming.In the first year,the firm sold 11,000 units of software at $75 per unit.Of the $75 per unit,$55 goes for the costs of production,packaging,marketing,employee wages and benefits,and rent on a building.
-Refer to the above information.If the price of the product increases to $85,then the economic profit will be

Accepted Answer

A)  $60,000. 
B)  $220,000. 
C)  $270,000. 
D)  $330,000. 
E)  $250,000. 
A)  $60,000. 
B)  $220,000. 
C)  $270,000. 
D)  $330,000. 
E)  $250,000.

Question 20

Barriers to entry are

Accepted Answer

A)  always legal in nature. 
B)  advantageous to firms but never harm consumers. 
C)  always economic in nature. 
D)  advantageous to consumers but always harm firms. 
E)  constraints,legal,economic,or otherwise that limit the movement of resources. 
A)  always legal in nature. 
B)  advantageous to firms but never harm consumers. 
C)  always economic in nature. 
D)  advantageous to consumers but always harm firms. 
E)  constraints,legal,economic,or otherwise that limit the movement of resources.

Sidney Crosby's economic rent from playing hockey in the NHL is equal to the difference between his

If the owners of a business are receiving total revenue sufficient to cover all their explicit and implicit costs,they are

Generally, motivate firms to enter an industry,while motivate firms to exit an industry.

-Refer to the diagram above.The firm is experiencing diseconomies of scale when output is

A firm earning a normal profit

-Refer to the graph above.If a firm was originally producing on SATC3 but now desires to reduce its output to 600 units,in the short run it will use the plant size represented by

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the total costs of the firm at the profit-maximizing output are equal to

-Refer to the diagram above.The firm is experiencing economies of scale when output is

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D' and SRS,respectively,the firm is making a profit of

-Use the data in the table above.The marginal revenue for each additional batch of five units of output is

If firms are exiting a perfectly competitive industry,this suggests that

The value of income received by a firm in return for supplying goods and services is called

If accounting profit is positive,then

Economic profit is

If economic profit is negative but accounting profit is positive,then

Superstar professional athletes can sustain their economic rents because

Suppose that Robert is willing to work for $10 per hour and receives an offer of $15 per hour.Robert's

Barriers to entry are

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 6: Efficiency and Exchange

Sidney Crosby's economic rent from playing hockey in the NHL is equal to the difference between his

If the owners of a business are receiving total revenue sufficient to cover all their explicit and implicit costs,they are

Generally,______ motivate firms to enter an industry,while ______ motivate firms to exit an industry.

-Refer to the diagram above.The firm is experiencing diseconomies of scale when output is

A firm earning a normal profit

-Refer to the graph above.If a firm was originally producing on SATC3 but now desires to reduce its output to 600 units,in the short run it will use the plant size represented by

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D and SRS,respectively,the total costs of the firm at the profit-maximizing output are equal to

-Refer to the diagram above.The firm is experiencing economies of scale when output is

Right Panel: The market: a shift of short-run supply in response to an increase in demand. -Refer to the diagrams above.If the market demand for wheat and the market supply of wheat are represented by D' and SRS,respectively,the firm is making a profit of

-Use the data in the table above.The marginal revenue for each additional batch of five units of output is

If firms are exiting a perfectly competitive industry,this suggests that

The value of income received by a firm in return for supplying goods and services is called

If accounting profit is positive,then

Economic profit is

If economic profit is negative but accounting profit is positive,then

Superstar professional athletes can sustain their economic rents because

Suppose that Robert is willing to work for $10 per hour and receives an offer of $15 per hour.Robert's

Barriers to entry are

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Generally, motivate firms to enter an industry,while motivate firms to exit an industry.