WorksheetsQuizizz--Economics (Module 3--Element 1.7)--Profit & Loss
Total questions: 27
Worksheet time: 14mins
How do profits influence business activities according to the text?
They direct businesses toward wasteful activities.
They guide businesses away from productive activities.
They direct businesses toward productive activities that increase resource value.
They have no impact on business activities.
What is the role of losses in business behavior as described in the text?
Losses encourage businesses to invest more.
Losses direct businesses away from wasteful activities.
Losses have no effect on business decisions.
Losses direct businesses away from activities that reduce resource value.
What is the difference between net income and economic profit according to the text?
Net income includes opportunity costs, while economic profit does not.
Economic profit includes opportunity costs, while net income does not.
Both net income and economic profit exclude opportunity costs.
Both net income and economic profit include opportunity costs.
What do producers need to do in a market economy to obtain resources?
Pay less than the opportunity cost of the resources.
Bid resources away from their alternative uses.
Acquire resources without any payment.
Use resources without considering their value.
What is the opportunity cost if a corporation invests $100 million in buildings and equipment instead of putting it in the bank at a 5% interest rate?
$10 million
$5 million
$15 million
$20 million
How is a firm's profit determined according to the text?
Profit = Total Revenue + Total Cost
Profit = Total Revenue - Total Cost
Profit = Total Cost - Total Revenue
Profit = Total Revenue x Total Cost
What must a firm do to earn a profit according to the text?
Generate less revenue than the opportunity cost
Generate more revenue than the opportunity cost
Match the revenue with the opportunity cost
Ignore the opportunity cost
What is the condition for consumers to purchase a good?
The price must be lower than the production cost.
They must value it as much or more than the price.
The good must be available in large quantities.
The good must be a necessity.
What is profit described as in the text?
A penalty for inefficient production.
A reward for transforming resources into something of greater value.
A measure of consumer satisfaction.
A result of high sales volume.
What happens when the total revenue from sales is less than the opportunity cost of the resources used?
The business makes a profit.
The business breaks even.
The business incurs losses.
The business gains market share.
In the example of the shirt manufacturer, what is the monthly profit if 1,000 shirts are sold at $22 each?
$20,000
$22,000
$2,000
$0
What is the manufacturer's profit a reward for?
Reducing the cost of production
Increasing the value of resources by converting them into a more highly valued product
Selling products at a lower price
Increasing the quantity of production
What happens if the demand for shirts declines and they are sold for $17 each?
The manufacturer will earn $20,000, gaining $3,000 a month
The manufacturer will earn $17,000, losing $3,000 a month
The manufacturer will break even
The manufacturer will earn $14,000, losing $6,000 a month
In a market economy, what role do losses and business failures play?
They encourage the production of inefficient goods
They halt the production of goods that sell for more than their cost
They redirect resources toward the production of more highly valued goods
They increase the cost of production
What is the benefit of directing resources toward wealth-creating projects?
It decreases the value of resources.
It promotes economic progress.
It increases production costs.
It limits potential investment projects.
What should be encouraged to get the most out of available resources?
Projects that increase value.
Projects that use resources less productively.
Projects that reduce economic progress.
Projects that limit consumer value.
What is a key characteristic of a market economy according to the text?
Fixed market prices.
Predictable production costs.
Reward-penalty structure.
Stable consumer tastes.
Who are entrepreneurs according to the text?
Individuals who produce inefficiently.
Individuals who anticipate market changes incorrectly.
Individuals who produce efficiently and anticipate correctly.
Individuals who ignore consumer preferences.
What happens to business executives who allocate resources inefficiently into areas where demand is weak?
They will prosper.
They will be penalized with losses and financial difficulties.
They will receive government support.
They will gain market share.
What is the role of profits in directing business investment?
To encourage investment in counterproductive projects.
To promote economic progress by directing investment toward productive projects.
To reduce competition in the market.
To increase the cost of production.
What did Steve Jobs do after leaving Apple in 1985?
He founded Microsoft.
He founded neXT, a firm for the next generation of personal computers.
He became a professor.
He retired from the technology industry.
What is the consequence for economies that fail to direct resources effectively?
They will experience rapid growth.
They will almost surely experience stagnation or worse.
They will become more competitive.
They will attract more foreign investment.
If a company is experiencing losses over a period of time, what “signal” is being sent to that producer?
The company should continue to produce in that same way and appeal to the government for a subsidy or bailout in order to buy more time.
The company should spend more money on marketing and branding to get consumers to buy what they are selling at current prices.
The company is no longer producing a good/serivce that people value and needs to change the plan or shut down so resources can be allocated to products consumers value.
If we are going to get the most value from our resources, entrepreneurs should choose the investment alternatives that
are most heavily subsidized by the government.
yield a profitable rate of return.
result in the production of the largest possible output regardless of value to consumers.
reduce the value of resources and retard wealth accumulation.
When economic losses are present in a market, firms will tend to
increase output.
lower their prices, regardless of cost, so they can capture more of the market.
raise their prices, because higher prices always lead to larger profits.
exit from the market
If a business is losing money on the goods it is producing, this indicates that
the consumer values the goods highly relative to costs.
the resources would be used more productively producing other things.
. the resources used to produce the goods are too expensive and need to be subsidized in order to be used productively
the business is producing the goods at the lowest possible cost.
Losses and business failures
indicate that sellers are producing the commodity at the lowest possible cost.
reflect that buyers value the product highly relative to costs.
will help redirect resources away from unproductive projects.
illustrate why government subsidies are necessary if resources are going to be allocated efficiently
