DEC5114 Tutorial 08

Economists assume that the typical person who starts her own business does so with the intention of

• donating the profits from her business to charity.

• capturing the highest number of sales in her industry.

• maximizing profits.

• minimizing costs.

Economists assume that the goal of the firm is to maximize total

• revenue.

• profits.

• costs.

• satisfaction.

If Danielle sells 300 wrist bands for $0.50 each, her total revenues are

• $150.

• $299.50.

• $300.

• $600.

The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works' total costs for producing 400 candles are $500. The Wax Works' economic profit is

• -$100.

• $3,500.

• $4,500.

• indeterminate from this information.

Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.

Refer to Scenario 8.1. During the year your economic costs were

• $40,000.

• $60,000.

• $100,000.

• $130,000.

Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.

Refer to Scenario 8.1. A yearly normal return for your computer software firm would be

• $20,000.

• $40,000.

• $60,000.

• $100,000.

Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.

Refer to Scenario 8.1. Your accounting profit last year was

• $10,000.

• $30,000.

• $50,000.

• $60,000.

Scenario 8.1: You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year.

Refer to Scenario 8.1. Your economic profit last year was

• -$40,000.

• -$10,000.

• $10,000.

• $30,000.

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

• diminishing labor.

• diminishing output.

• diminishing marginal product.

• negative marginal product.

Refer Figure 8.1. The marginal product of the second worker is ________ lawns mowed.

• 3

• 5

• 8

• 11