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AP MICRO 3.4 & 3.5

Authored by kandice nifong.

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12th Grade

Used 8+ times

AP MICRO 3.4 & 3.5
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31 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If accounting profit is greater than zero for a firm in a competitive industry, then which of the following must be true?

The firm has no fixed cost.

The firm has positive economic profit.

The firm’s total revenue exceeds its explicit cost.

The firm’s economic profit exceeds its opportunity cost.

New firms will enter the industry in the long run.

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Raheem is currently working as a financial analyst earning $75,000 a year and is considering quitting his current job to start an art gallery. The estimated annual revenue from the art gallery is $175,000. The annual cost of labor, advertising, and acquiring the art inventory is $125,000. What are Raheem’s accounting and economic profits if he opens the art gallery?

Accounting profit is –$25,000, and economic profit is $50,000.

Accounting profit is $100,000, and economic profit is $50,000.

Accounting profit is $50,000, and economic profit is –$25,000.

Accounting profit is $100,000, and economic profit is –$25,000.

Accounting profit is $50,000, and economic profit is $100,000.

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the marginal revenue of the 201st unit of output is $15 and the marginal cost of the 201st unit is $20, the total economic profit of producing 201 units will be

$995

$1000

$1005

$1015

$1035

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Media Image

Dylan recently quit his job as a journalist for a local newspaper where he was making $80,000 per year. He opened an ice-cream shop where he earns a yearly total revenue of $250,000. He spends $150,000 each year on rent, resources, and workers he hires. Which of the following equals Dylan’s accounting profit and economic profit from the ice-cream shop?

A

B

C

D

E

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following ignores implicit costs?

Normal profit

Accounting Profit

Economic profit

Opportunity cost

Economic cost

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Assume that a firm is maximizing short-run profits and that price is greater than average variable cost. Which of the following must be true at the firm’s level of output?

Marginal revenue is equal to average total cost.

Marginal revenue is greater than total variable cost.

Marginal revenue is equal to price, which is greater than average total cost.

Marginal revenue is equal to marginal cost.

Price is equal to average total cost.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

At the current output level, a firm finds that it has the potential to increase its profit by expanding output. If P = price, MR = marginal revenue, and MC = marginal cost, which of the following must hold at the current output for this firm?

P = MR < MC

P = MR = MC

MR = MC

MR > MC

MR < MC

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