The implicit cost of capital is:
1. Accountants use only _____ costs in their computations.
a. opportunity
b. implicit
c. explicit
d. variable
2. The implicit cost of capital is:
a. the explicit cost of capital that the firm might have used but didn’t need to.
b. depreciation.
c. the opportunity cost of the capital used by a business.
d. the cost of human capital.
3. During its only year of operation, a firm collected $175,000 in revenue and spent $50,000 on raw materials, labor, and utilities. The owners of the firm spent $100,000 of their own money to build the firm’s factory (instead of buying bonds and earning a 10% annual rate of return), which they sold at the end of the year for $100,000. The firm’s economic profit is:
a. $35,000.
b. $125,000.
c. $115,000.
d. $25,000.
4. A “how much” decision is BEST made by comparing the _____ of an action to the _____ of that action.
a. explicit costs; implicit costs
b. accounting profit; economic profit
c. marginal benefits; marginal costs
d. present value; net present value
5. Wendy sells ice-making machines. She can sell six per week at a price of $2,000 per machine. If she charges $2,100 per machine, she will sell only five per week. The marginal benefit of selling the sixth ice-making machine is:
a. $2,000.
b. $2,100.
c. $12,000.
d. $1,500.
6. (Table: Marginal Benefit of Sweatshirts) Use Table: Marginal Benefit of Sweatshirts. The marginal benefit of producing the second sweatshirt is:
a. $31.
b. $16.
c. $15.
d. $14.
7. (Figure: Marginal Benefits and Marginal Costs) Use Figure: Marginal Benefits and Marginal Costs. More time spent studying economics adds points to economics scores (MB) but subtracts points from accounting scores (MC). When Claudia studies economics for four hours, the marginal benefit is _____ points; when she studies for 6 hours, the marginal benefit is _____ points.
a. 20; 10
b. 30; 10
c. 20; 0
d. 20; 30
8. (Table: Tutoring) Use Table: Tutoring. If he can charge all students their willingness to pay, Sigmund’s optimal number of tutoring hours is:
a. 5.
b. 4.
c. 3.
d. 2.
9. (Table: Tutoring) Use Table: Tutoring. If he can charge all students their willingness to pay, at the optimal hours of tutoring, Sigmund’s total profit is:
a. $60.
b. $50.
c. $30.
d. $15.
10. The relation between an individual’s consumption bundle and her satisfaction is called a _____ function.
a. demand
b. production
c. consumption
d. utility
11. The marginal utility of coffee consumption for Steve is the change in _____ generated by consuming an additional cup of coffee.
a. total utility
b. total consumption
c. total demand
d. price
12. Which statement BEST describes the principle of diminishing marginal utility? As an individual consumes more of a good:
a. the total utility obtained will eventually fall.
b. the total utility obtained will eventually become negative.
c. the addition to total utility obtained from the nth unit of the good will be less than that obtained from the immediately preceding unit of the good.
d. the marginal utility will eventually become negative.
13. (Figure and Table: The Budget Line) Use Figure and Table: The Budget Line. An increase in income would:
a. rotate the budget line, changing the intercept on the horizontal axis.
b. shift the budget line to the left.
c. rotate the budget line, changing the intercept on the vertical axis.
d. shift the budget line to the right.
14. For most goods, demand curves slope downward because:
a. marginal utility rises as quantity demanded increases.
b. the substitution effect constitutes almost the entire effect of a price change, and this effect always causes quantity demanded and price to be inversely related.
c. the income effect constitutes almost the entire effect of a price change, and this effect always causes quantity demanded and price to be inversely related.
d. the income and substitution effects work in opposite directions.
15. A fixed input is one:
a. that only exists in nature, and there is only so much of it.
b. that can be used for one thing only.
c. that can never produce more or less in any period.
d. whose quantity cannot be changed in the short run.
16. When an additional unit of a variable input adds less to total product than the previous unit, the firm has:
a. increasing returns.
b. diminishing marginal returns.
c. diminishing total returns.
d. diminishing marginal returns and diminishing total returns.
17. (Figure: Change in the Total Product) Use Figure: Change in the Total Product. Which choice is a likely cause of the shift in production function from TP1 to TP2?
a. Workers in the firm are less productive on average.
b. The firm employed more of a variable input in the short run.
c. Available technology has decreased.
d. The firm employed more of a fixed input in the long run.
18. (Table: Total Cost Data) Use Table: Total Cost Data. What is the fixed cost for this bicycle firm?
a. $40
b. $50
c. $100
d. $70
19. (Table: Total Cost Data) Use Table: Total Cost Data. What is the total variable cost for this bicycle firm when the firm produces 5 bicycles?
a. $50
b. $240
c. $60
d. $190
20. Once diminishing returns have set in, as output increases, the total cost curve:
a. gets steeper.
b. gets flatter.
c. becomes horizontal.
d. increases at first, and then decreases.
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
