7)As long as implicit costs are positive then:
a)accounting profits must be greater than economic profits
b)accounting profits could be greater than or less than economic
profits
c)accounting profits must be less than economic profits
12) Ben is running his own consulting firm. Last year Ben had an
economic profit of negative $50,000 and an accounting profit of
$100,000. From this we know:
a) Ben's implicit costs are equal to $50,000
b)ben's explicit costs are equal to $150,000
c)Ben's implicit costs are equal to $100,000
d) Ben's implicit costs are equal to $150,000
13) Ben is running his own consulting firm. Last year Ben had an
economic profit of negative $50,000 and an acconting profit of
$100,000. Assume that Ben knows that everything will stay the same
next year as this year. If Ben shut down his business an used all of
the resources in their next best alternative then at the end of the
next year:
a)Ben would have $150,000 more money than if he continued to run his
own business.
b)Ben would have $50,000 more money than if he continued to run his
own business.
c)Ben would have $100,000 less money but would make up for it by
having fewer implicit costs.
d)Ben would have $100,000 more money than if he continued to run his
own business.
14)Assume Katie runs her own business and is earning a positive
economic profit of $40,000. Her friend Karen is working at what is
Katie's next best altenative (i.e. if Katie shut down her business she
would be working at the same type of job Karen is working at for the
same pay). If Karen calculated her economic profit it would be equal
to:
a) a positive $40,000
b)a negative $40,000
c)none of the above
15) Economists argue that positive economic profits will, if there is
free entry and exit, eventually be eliminated. How does this happen?
a)positive economic profits lead to workers demanding a higher wage
rate which causes explicit costs to increase
b)eventually consumers willnot be willing to pay such high prices for
the goods being sold.
c)new firms come into the industry whichh drives prices down
d)all of the above
17)An example of an implicit cost of production would be:
a)the income an entrepreneur could have earned working for someone
else
b)the cost of raw materials for producing bread in a bakery
c)the cost of a delivery truck in a business that rarely makes
deliveries
d)all of the above are correct |
