Topic 1 - Quiz 1 - 2129

Consider a​ two-period firm where π1 is profit in year​ 1, and π2 is profit in year​ 2, and r is the interest rate. The total profit over the two periods from the firm can be represented by:

Total economic cost:

• is the sum of all explicit opportunity costs the firm’s owners incur by employing resources that they own.

• is the sum of all implicit opportunity costs the firm’s owners incur by employing resources that must be purchased in resource markets.

• is subtracted from total revenue to compute accounting profit.

• represents the opportunity cost of all resources used by the firm to produce goods and services.

Consider a firm that employs some resources that are owned by the firm. When economic profit is zero, accounting profit is

• positive and equal to the opportunity cost of all the resources used in production.

• equal to the implicit costs of using owner-supplied resources.

• negative.

• also zero.

Consumer–consumer rivalry arises because of

• human nature.

• the limited number of suppliers.

• the scarcity of goods available.

• the dependence of producers upon technology.

Consumer–consumer rivalry

• increases the negotiating power of consumers in the marketplace.

• reduces the negotiating power of producers in the marketplace.

• reduces the negotiating power of consumers in the marketplace.

• increases the likelihood of government intervention in the marketplace.