The Costs of Production - What Are Costs?

Economists normally assume that the goal of a firm is to

(i)

sell as much of their product as possible.

(ii)

set the price of the product as high as possible.

(iii)

maximize profit.

• (i) and (ii) are true

• (ii) and (iii) are true.

• (iii) is true.

• (i) and (iii) are true.

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

• The cost of something is what you give up to get it.

• A country's standard of living depends on its ability to produce goods and services

• Prices rise when the government prints too much money.

• Governments can sometimes improve market outcomes.

The amount of money that a firm receives from the sale of its output is called

• total gross profit.

• total net profit.

• total revenue.

• net revenue.

Total cost is the

• amount a firm receives for the sale of its output.

• fixed cost less variable cost.

• market value of the inputs a firm uses in production.

• quantity of output minus the quantity of inputs used to make a good.

Profit is defined as

• net revenue minus depreciation.

• total revenue minus total cost.

• average revenue minus average total cost.

• marginal revenue minus marginal cost.

Which of the following can be added to profit to obtain total revenue?

• net profit

• capital profit

• operational profit

• total cost

If Kelsey sells 300 glasses of lemonade at $0.50 each, her total revenues are

• $150

• $299.50.

• $300.

• $600.

XYZ corporation produced 300 units of output but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. Each of the 275 units sold was sold for a price of $95. Total profit for the XYZ corporation would be

• -$3,875.

• $26,125

• $28,500.

• $30,000.

Those things that must be forgone to acquire a good are called

• implicit costs.

• opportunity costs.

• explicit costs.

• accounting costs.

A firm's opportunity costs of production are equal to its

• explicit costs only.

• implicit costs only.

• explicit costs + implicit costs.

• explicit costs + implicit costs + total revenue.