Economic Concepts and Profit Analysis

Front

Profit is: TR - FC, Q × (P - AVC), (P × Q) - TC.

Back

(P × Q) - TC.

Front

In defining economic costs, economists recognize: Explicit and implicit costs while accountants recognize only explicit costs.

Back

Explicit and implicit costs while accountants recognize only explicit costs.

Front

Hideki is the owner/operator of a flower shop. Last year he earned $250,000 in total revenue. His explicit costs were $175,000 paid to his employees and suppliers. He received three offers to work for other flower shops with the highest offer being $75,000 per year. Which of the following is true about Hideki's accounting and economic profit?

Back

Accounting profit = $75,000; economic profit = $0.

Front

Perfect competition is a situation in which:

Back

There are many firms and no buyer or seller has market power.

Front

If a firm can change market prices by altering its output, then it:

Back

Has market power.

Front

If the equilibrium price in a perfectly competitive market for walnuts is $4.99 per pound, then an individual firm in this market can:

Back

Sell an additional pound of walnuts at $4.99.

Front

Which of the following represents the change in total cost that results from a 1-unit increase in production? Marginal profit. Total revenue. Marginal cost. Marginal revenue.

Back

Marginal cost.

Front

When the short-run marginal cost curve is upward-sloping:

Back

Diminishing returns occur with greater output.

Front

Short-run profits are maximized, for a perfectly competitive firm, at the rate of output where:

Back

Marginal revenue is equal to marginal cost.

Front

A perfectly competitive firm should expand output when: P > MC.

Back

P > MC.