Economics chapter 9

  1. The law of diminishing returns indicates that:

    B. As extra units of a variable resource are added to a fixed resource, the extra or marginal product will decline beyond some point.
  2. Which of the following definitions is correct?

    B. Economic profit = accounting profit – implicit costs.
  3. Economic profits are calculated by subtracting

    C. Explicit and Implicit costs from total revenue
  4. Normal Profit is:

    B. The return to the entrepreneur when economic profits are zero.
  5. To economists, the main difference between 'the short run' and 'the long run' is that:

    B. In the long run, all resources are variable while, in the short run, at least one resource is fixed.
  6. 'Economies of scale' refers to:

    C. The fact that large producers may be able to use more efficient technologies.
  7. Economic cost can best be defined as:

    A. Compensations which must be received by resource owners to ensure their continued supply.
  8. The basic characteristic of the short run is that:

    C. The firm does not have sufficient time to change the size of its plant.
  9. Suppose that a business incurred implicit costs of $200 000 and explicit costs of $1 million in a specific year. It the firm sold 4000 units of its output at $300 per unit, its accounting profits were:

    C. $200 000, and its economic profits were zero.
  10. Which of the following constitutes an implicit cost to the Jackson Manufacturing Company?

    C. Depreciation charges on company - owned equipment.
Card Set
Economics chapter 9
Economics Chapter 9