AP Econ Unit 3

Ryan quit a job with a daily salary and opened a business. On a daily basis, the total revenue of the business is $200, and the explicit costs of the business are $120. If Ryan has zero economic profits, what must be the value of Ryan's implicit costs?

$80

what are the 3 rules?

1. MR = MC 2. P = Demand 3. TR < TVC --> shutdown

Based on the short-run production function graph above showing the relationship between the quantity of labor and total product, which of the following statements is true?

Total product is maximized when marginal product is zero.

Which of the following statements regarding accounting profits, opportunity costs, and economic profits is true?

If accounting profits are less than opportunity costs, there will be economic losses.

Which of the following provides an example of the law of diminishing returns?

As more of a variable input—for example, labor is used with a fixed number of machines— output increases but at a diminishing rate.

Assume Nadia voluntarily leaves a job with a salary of $100 per day to open and run a restaurant instead. After deducting all explicit costs from the restaurant revenues, Nadia has a gain of $120. Assuming there are no additional implicit costs, which of the following statements is true?

Nadia has an economic profit of $20

Assume the marginal product of labor first rises, reaches a maximum, and then falls. If the average product of labor is falling, which of the following is true?

The marginal product of labor must be falling.