Micro quiz 4

Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled:

$94,000

The price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and Eddie has $5 to spend on both goods. The maximum number of boxes of popcorn that he can purchase is:

10

Bessie wants to calculate the accounting and economic profits on her cattle farm in Nebraska. She pays $30,000 per year for the cost of raising cattle, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a teacher. If her total revenue equals $140,000, that means her accounting profit is _____ and her economic profit is _____.

$10,000; -$20,000

A student organization is formed on your college campus to protest against the high rent for apartments near campus. This organization is planning a meeting with the dean and president of the college. Which concept best describes the policy the student organization will fight for?

a price ceiling

Which of these is an example of a black market?

a tenant in a rent-controlled apartment subletting at a higher rent

Consumer surplus for an individual buyer is equal to:

the consumer's willingness to pay for the good minus the price of the good

Which concept is an example of a price floor?

the minimum wage

Producer surplus for an individual seller is equal to:

the price of the good minus the cost of producing the good.

The marginal utility of coffee consumption for Steve is the change in _____ generated by consuming an additional cup of coffee.

total utility

Suppose Bob has a part-time business washing cars. He has washed nine cars on a given day; the marginal benefit of washing the tenth car is $20 and the marginal cost is $12. Bob should:

wash the tenth car.

When total utility is at a maximum, marginal utility is

zero

Accounting profit differs from economic profit because:

economic costs are generally higher than accounting costs because economic costs include all opportunity costs, whereas accounting costs include explicit costs only.

Money that must be paid for the use of factors of production such as labor and capital is an:

explicit cost.

Maria wants to get rid of her bookshelf. She is willing to give it away for free but her neighbor offers to pay $30 for it. Maria experiences a:

producer surplus gain.

The utility of a good is determined by how much _____ a particular consumer obtains from it.

satisfaction

According to the profit-maximizing principle of marginal analysis, if the marginal benefit is:

more than marginal cost, an activity should be increased