Question 1

-Use the data in the table above.An output level of 25 units results in

Accepted Answer

A)  an economic loss of $8. 
B)  an accounting loss of $8. 
C)  normal profit. 
D)  positive accounting profit. 
E)  economic profit of zero. 
A)  an economic loss of $8. 
B)  an accounting loss of $8. 
C)  normal profit. 
D)  positive accounting profit. 
E)  economic profit of zero.

Question 2

Implicit costs

Accepted Answer

A)  are always fixed. 
B)  appear in the calculation of accounting profit. 
C)  measure the forgone opportunities of the owners of the business. 
D)  always exceed explicit costs. 
E)  are irrelevant to business decisions. 
A)  are always fixed. 
B)  appear in the calculation of accounting profit. 
C)  measure the forgone opportunities of the owners of the business. 
D)  always exceed explicit costs. 
E)  are irrelevant to business decisions.

Question 3

If the input needed by an industry has a perfectly inelastic supply,the long-run market supply curve for the industry will be

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  upward-sloping. 
D)  downward-sloping. 
E)  S-shaped. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  upward-sloping. 
D)  downward-sloping. 
E)  S-shaped.

Question 4

Assume that all firms in a particular perfectly competitive industry are earning economic profits.This will cause firms to ______ the industry,which will continue until ______.

Accepted Answer

A)  exit;economic losses occur 
B)  enter;economic profits are zero 
C)  enter;accounting profits are zero 
D)  exit;economic profits are zero 
E)  enter;economic profits are negative 
A)  exit;economic losses occur 
B)  enter;economic profits are zero 
C)  enter;accounting profits are zero 
D)  exit;economic profits are zero 
E)  enter;economic profits are negative

Question 5

Accounting profit minus implicit costs is equal to

Accepted Answer

A)  total revenue. 
B)  economic profit. 
C)  explicit costs. 
D)  fixed and variable costs. 
E)  the value of not operating this business. 
A)  total revenue. 
B)  economic profit. 
C)  explicit costs. 
D)  fixed and variable costs. 
E)  the value of not operating this business.

Question 6

If economic profit is positive,then

Accepted Answer

A)  firms will be exiting the industry. 
B)  accounting profit can be either negative,zero,or positive. 
C)  the firm is receiving exactly a normal profit. 
D)  accounting profit is either zero or positive. 
E)  accounting profit must be positive. 
A)  firms will be exiting the industry. 
B)  accounting profit can be either negative,zero,or positive. 
C)  the firm is receiving exactly a normal profit. 
D)  accounting profit is either zero or positive. 
E)  accounting profit must be positive.

Question 7

Adam Smith claimed that an efficient allocation of resources was the by-product of

Accepted Answer

A)  random error. 
B)  selfish interests of sellers pursuing profit. 
C)  well-intentioned government regulation. 
D)  selfish interests of buyers pursuing pleasure. 
E)  the involvement of self-interested sellers seeking profits with self-interested buyers seeking pleasure. 
A)  random error. 
B)  selfish interests of sellers pursuing profit. 
C)  well-intentioned government regulation. 
D)  selfish interests of buyers pursuing pleasure. 
E)  the involvement of self-interested sellers seeking profits with self-interested buyers seeking pleasure.

Question 8

If resources are misallocated,then the presence of opportunities for profit

Accepted Answer

A)  will exist,and selfish interests ensure someone will profit. 
B)  will exist,but it is uncertain if someone will seek to profit. 
C)  may or may not exist. 
D)  will exist,but no one will realize their existence. 
E)  will not exist. 
A)  will exist,and selfish interests ensure someone will profit. 
B)  will exist,but it is uncertain if someone will seek to profit. 
C)  may or may not exist. 
D)  will exist,but no one will realize their existence. 
E)  will not exist.

Question 9

The reason economic profit is driven to zero by competition,but economic rent is not,stems from

Accepted Answer

A)  an inability to produce more of the input earning the rent. 
B)  barriers to entry. 
C)  a lack of competition law for input markets. 
D)  a failure of the invisible hand. 
E)  an inefficient allocation of inputs. 
A)  an inability to produce more of the input earning the rent. 
B)  barriers to entry. 
C)  a lack of competition law for input markets. 
D)  a failure of the invisible hand. 
E)  an inefficient allocation of inputs.

Question 10

-Use the data in the table above.The normal profit from producing 10 units of output is

Accepted Answer

A)  $14. 
B)  $11. 
C)  $9. 
D)  $5. 
E)  $4. 
A)  $14. 
B)  $11. 
C)  $9. 
D)  $5. 
E)  $4.

Question 11

Suppose that a remote community in New Brunswick lacks broadband access to the Internet.A proponent of the invisible hand view would argue that

Accepted Answer

A)  government regulation is necessary to ensure access. 
B)  the selfish pursuit of profit by Internet service providers will bring access to those willing to pay for it. 
C)  the selfish pursuit of pleasure by consumers will cause them to want another unnecessary service. 
D)  the consumers need to move to a large city. 
E)  the lack of access is the efficient allocation. 
A)  government regulation is necessary to ensure access. 
B)  the selfish pursuit of profit by Internet service providers will bring access to those willing to pay for it. 
C)  the selfish pursuit of pleasure by consumers will cause them to want another unnecessary service. 
D)  the consumers need to move to a large city. 
E)  the lack of access is the efficient allocation.

Question 12

Explicit costs

Accepted Answer

A)  are the only costs that matter to business owners. 
B)  usually exceed implicit costs. 
C)  are difficult to measure. 
D)  appear on the firm's balance sheet. 
E)  tend to be less than implicit costs. 
A)  are the only costs that matter to business owners. 
B)  usually exceed implicit costs. 
C)  are difficult to measure. 
D)  appear on the firm's balance sheet. 
E)  tend to be less than implicit costs.

Question 13

Which of the following is NOT an example of explicit costs?

Accepted Answer

A)  Wages paid to workers. 
B)  Personal savings of the owner,invested in the firm. 
C)  Salaries paid to management. 
D)  Fees paid for maintenance of the firm's Web site. 
E)  Office space rent. 
A)  Wages paid to workers. 
B)  Personal savings of the owner,invested in the firm. 
C)  Salaries paid to management. 
D)  Fees paid for maintenance of the firm's Web site. 
E)  Office space rent.

Question 14

To calculate accounting profit,one takes the difference between

Accepted Answer

A)  total revenue and explicit costs. 
B)  total revenue and fixed costs. 
C)  implicit total revenue and the sum of fixed and variable costs. 
D)  total revenue and the sum of fixed and variable costs. 
E)  total revenue and the sum of explicit and implicit costs. 
A)  total revenue and explicit costs. 
B)  total revenue and fixed costs. 
C)  implicit total revenue and the sum of fixed and variable costs. 
D)  total revenue and the sum of fixed and variable costs. 
E)  total revenue and the sum of explicit and implicit costs.

Question 15

When economists refer to the stock of capital,they are referring to

Accepted Answer

A)  seed money. 
B)  start-up cost. 
C)  a fixed amount of durable inputs such as tools,machinery and buildings. 
D)  a flow of venture capital. 
E)  the stock market. 
A)  seed money. 
B)  start-up cost. 
C)  a fixed amount of durable inputs such as tools,machinery and buildings. 
D)  a flow of venture capital. 
E)  the stock market.

Question 16

-From the table above,it is clear that

Accepted Answer

A)  accounting for opportunity costs increases profitability. 
B)  if accounting profit is positive,economic profit will also be positive. 
C)  if economic profit is negative,accounting profit will also be negative. 
D)  if accounting profit is zero,economic profit must be negative. 
E)  if accounting profit is positive,economic profit will be negative. 
A)  accounting for opportunity costs increases profitability. 
B)  if accounting profit is positive,economic profit will also be positive. 
C)  if economic profit is negative,accounting profit will also be negative. 
D)  if accounting profit is zero,economic profit must be negative. 
E)  if accounting profit is positive,economic profit will be negative.

Question 17

If all firms in a perfectly competitive industry are earning a normal profit,then

Accepted Answer

A)  firms will be entering the industry. 
B)  the number of firms in the industry is stable. 
C)  firms will be exiting the industry. 
D)  firms are doing better than their next-best alternative. 
E)  firms are doing worse than their next-best alternative. 
A)  firms will be entering the industry. 
B)  the number of firms in the industry is stable. 
C)  firms will be exiting the industry. 
D)  firms are doing better than their next-best alternative. 
E)  firms are doing worse than their next-best alternative.

Question 18

-Use the data in the table above.The behaviour of implicit costs suggests that they are

Accepted Answer

A)  fixed. 
B)  small. 
C)  variable. 
D)  large. 
E)  non-linear. 
A)  fixed. 
B)  small. 
C)  variable. 
D)  large. 
E)  non-linear.

Question 19

Cost-saving developments,e.g. ,a new production procedure that saves two steps,introduced by a price-taking firm in a competitive market lead to

Accepted Answer

A)  entry by new firms. 
B)  positive economic profit for new firms. 
C)  positive economic profit for a few firms for a short time. 
D)  higher consumer prices in the long run. 
E)  a leftward shift of the supply curve. 
A)  entry by new firms. 
B)  positive economic profit for new firms. 
C)  positive economic profit for a few firms for a short time. 
D)  higher consumer prices in the long run. 
E)  a leftward shift of the supply curve.

Question 20

-Use the data in the table above.At what output level,or levels,are the business owners doing better than their next best alternative?

Accepted Answer

A)  10 units. 
B)  10 and 15 units. 
C)  10,15,and 20 units. 
D)  10,15,20,and 25 units. 
E)  10,15,20,25,and 30 units. 
A)  10 units. 
B)  10 and 15 units. 
C)  10,15,and 20 units. 
D)  10,15,20,and 25 units. 
E)  10,15,20,25,and 30 units.

-Use the data in the table above.An output level of 25 units results in

Implicit costs

If the input needed by an industry has a perfectly inelastic supply,the long-run market supply curve for the industry will be

Assume that all firms in a particular perfectly competitive industry are earning economic profits.This will cause firms to the industry,which will continue until .

Accounting profit minus implicit costs is equal to

If economic profit is positive,then

Adam Smith claimed that an efficient allocation of resources was the by-product of

If resources are misallocated,then the presence of opportunities for profit

The reason economic profit is driven to zero by competition,but economic rent is not,stems from

-Use the data in the table above.The normal profit from producing 10 units of output is

Suppose that a remote community in New Brunswick lacks broadband access to the Internet.A proponent of the invisible hand view would argue that

Explicit costs

Which of the following is NOT an example of explicit costs?

To calculate accounting profit,one takes the difference between

When economists refer to the stock of capital,they are referring to

-From the table above,it is clear that

If all firms in a perfectly competitive industry are earning a normal profit,then

-Use the data in the table above.The behaviour of implicit costs suggests that they are

Cost-saving developments,e.g. ,a new production procedure that saves two steps,introduced by a price-taking firm in a competitive market lead to

-Use the data in the table above.At what output level,or levels,are the business owners doing better than their next best alternative?

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

-Use the data in the table above.An output level of 25 units results in

Implicit costs

If the input needed by an industry has a perfectly inelastic supply,the long-run market supply curve for the industry will be

Assume that all firms in a particular perfectly competitive industry are earning economic profits.This will cause firms to ______ the industry,which will continue until ______.

Accounting profit minus implicit costs is equal to

If economic profit is positive,then

Adam Smith claimed that an efficient allocation of resources was the by-product of

If resources are misallocated,then the presence of opportunities for profit

The reason economic profit is driven to zero by competition,but economic rent is not,stems from

-Use the data in the table above.The normal profit from producing 10 units of output is

Suppose that a remote community in New Brunswick lacks broadband access to the Internet.A proponent of the invisible hand view would argue that

Explicit costs

Which of the following is NOT an example of explicit costs?

To calculate accounting profit,one takes the difference between

When economists refer to the stock of capital,they are referring to

-From the table above,it is clear that

If all firms in a perfectly competitive industry are earning a normal profit,then

-Use the data in the table above.The behaviour of implicit costs suggests that they are

Cost-saving developments,e.g. ,a new production procedure that saves two steps,introduced by a price-taking firm in a competitive market lead to

-Use the data in the table above.At what output level,or levels,are the business owners doing better than their next best alternative?

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

Assume that all firms in a particular perfectly competitive industry are earning economic profits.This will cause firms to the industry,which will continue until .