AP MICRO U3 (VOCAB)

Which of the following best defines an explicit cost?

• A cost that does not involve a direct monetary payment.

• The opportunity cost of using resources the firm already owns.

• A direct payment made by a firm for resources such as wages, rent, or materials.

• The profit earned after subtracting implicit costs.

What is an implicit cost?

• A direct payment made by a firm for wages, rent, or raw materials.

• The opportunity cost of using a resource the firm already owns instead of renting or selling it.

• The amount of revenue a business earns before expenses.

• The cost of a firm’s total inputs in production.

What is the definition of accounting profit?

• Total revenue minus explicit costs.

• Total revenue minus implicit costs.

• Total revenue minus both explicit and implicit costs.

• The total income earned by all employees of a firm.

What is the definition of economic profit?

• Economic profit only considers explicit costs.

• Economic profit does not consider opportunity costs.

• Economic profit is always greater than accounting profit.

• Economic profit is total revenue minus explicit and implicit costs.

What does implicit mean in economics?

• What does implicit mean in economics?

• A cost that involves a cash transaction.

• Implied or not directly stated but still a cost or factor.

• An expense paid in full before production begins.

What does explicit mean in economics?

• Stated clearly and involves direct monetary payments.

• Hidden or not directly measurable.

• A cost that does not require payment but represents a lost opportunity.

• The difference between revenue and profit.

What is the implicit cost of capital?

• The opportunity cost of using capital in one investment instead of another.

• The interest paid on a loan to fund capital investments.

• The total amount a firm pays for machinery and equipment.

• The cost of raw materials in production.

What is the definition of profit?

• What is the definition of profit?

• Profit = Total Cost - Total Revenue

• Profit = Fixed Costs + Variable Costs

• Profit = Total Revenue + Total Cost

What is normal profit?

• When a firm's economic profit is zero, meaning total revenue equals total costs (explicit + implicit)

• When a firm earns more than its total costs, including opportunity costs.

• he highest profit a business can earn in the short run.

• The amount a company pays in wages and rent.

What is the definition of marginal revenue?

• The additional cost of producing one more unit.

• The additional revenue gained from selling one more unit.

• The difference between total revenue and total cost.

• The profit earned per unit sold.