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