Chapter 13 Mankiw
Billy's Bean Bag Emporium produced 300 bean bag chairs but sold only 275 of the units it produced. The average cost of production for each unit of output produced was $100. The price for each of the 275 units sold was $95. Total profit for Billy's Bean Bag Emporium would be
-$3,875
If Danielle sells 300 wrist bands for $0.50 each, her total revenues are
$150
The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are
$32,500
Which of the following statements is correct?
Economists consider opportunity costs to be included in a firm's costs of production
A firm's opportunity costs of production are equal to its
explicit costs + implicit costs
Total revenue equals
price x quantity
Explicit costs
require an outlay of money by the firm
The amount of money that a firm receives from the sale of its output is called
total revenue
Profit is defined as
total revenue minus total cost
Economic profit
will never exceed accounting profit
An example of an explicit cost of production would be the
lease payments for the land on which a firm's factory stands
Marcus sells 300 candy bars at $0.50 each. His total costs are $125. His profits are
$25
Which of the following would be an example of an implicit cost? (i) forgone investment opportunities (ii) wages of workers (iii) raw materials costs
(i) only
Which of these assumptions is often realistic for a firm in the short run?
The firm can vary the number of workers it employs but not the size of its factory.
Total revenue minus only explicit costs is called
accounting profit
The difference between accounting profit and economic profit is
implicit costs
Total cost is the
market value of the inputs a firm uses in production
Economists assume that the typical person who starts her own business does so with the intention of
maximizing profits
The value of a business owner's time is an example of
opportunity cost
Economic profit is equal to total revenue minus the
opportunity cost of producing goods and services
Jamar used to work as an office manager, earning $40,000 per year. He gave up that job to start a life-coaching business. In calculating the economic profit of his life-coaching business, the $40,000 income that he gave up is counted as part of the life-coaching business's
opportunity costs
The things that must be forgone to acquire a good are called
opportunity costs