Entry of new firms will occur in a monopolistically competitive industry until a.margina

 Entry of new firms will occur in a monopolistically competitive industry until

a.marginal cost equals zero

b.marginal revenue equals zero

c.marginal revenue equals marginal cost

d.economic profit equals zero

e.economic profit is negative

162.              In the long run in a monopolistically competitive industry,

a.economic profit will be positive

b.the price will be driven to zero

c.the firm will not operate where MR = MC

d.economic profit will be zero

e.the price will exceed average total cost

163.              Explicit costs would include

a.the rent paid by a business owner for office space

b.the interest loss of the business owner on money withdrawn from his/her savings
account and invested in the business

c.the loss of rent on a building the business owner owns and uses in his/her business

d.the opportunity costs of the business owner’s time

e.the use of tools owned by the business owner and dedicated to the business

164.              Implicit costs are the

a.opportunity costs of using resources owned by the entrepreneur in his/her own
business

b.payments the business owner must make on borrowed funds

c.costs which vary as the level of output varies

d.payments the business owner makes in cash

e.payments the business owner makes for public relations, such as donations to charity

165.              Sam quits his job as an airline pilot and opens his own pilot training school. He was
                            earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning
                            6 percent interest and uses the money in his new business. He uses a building he owns as
                            a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200,
                            buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and
                            maintenance, and hires one worker for $30,000. Sam’s total revenue from pilot training
                            classes equaled $90,400. Sam’s implicit costs for this year are equal to

a.$84,400

b.$39,000

c.$55,000

d.$45,600

e.$40,000

166.              Sam quits his job as an airline pilot and opens his own pilot training school. He was
                            earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning
                            6 percent interest and uses the money in his new business. He uses a building he owns as
                            a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200,
                            buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and
                            maintenance, and hires one worker for $30,000. Sam’s total revenue from pilot training
                            classes this year equaled $90,400. Sam’s explicit costs this year equal

a.$84,400

b.$39,000

c.$55,000

d.$45,600

e.$40,000

167.              Sam quits his job as an airline pilot and opens his own pilot training school. He was
                            earning $40,000 as a pilot. He withdraws $10,000 from his savings where he was earning
                            6 percent interest and uses the money in his new business. He uses a building he owns as
                            a hangar that he could have rented out for $5,000 per year. He rents a computer for $1,200,
                            buys office supplies for $500, rents an airplane for $6,000, pays $1,300 for fuel and
                            maintenance, and hires one worker for $30,000. Sam’s total revenue from pilot training
                            classes this year equaled $90,400. How did Sam’s business do this year?

a.Sam realized an economic profit of $3,400 this year.

b.Sam realized an economic loss of $3,400 this year.

c.Sam realized an economic profit of $5,800 this year.

d.Sam realized an economic profit of $3,800 this year.

e.Sam realized an economic loss of $3,800 this year.

168.              If a firm is earning a normal profit, but zero economic profit, at the point where
                            MR = MC, the firm should

a.shut down

b.increase output and decrease price

c.increase output and increase price

d.decrease output and increase price

e.remain at its current level of output

169.              Economic profit is measured by

a.MR = MC

b.TR – explicit costs – implicit costs

c.TR – explicit costs

d.TR – implicit costs

e.P – MC

170.              The firm in a perfectly competitive industry

a.is a price-taker

b.is a price-maker

c.attempts to differentiate his/her product through advertising

d.will earn an economic profit in the long run

e.can charge any price it wishes

171.              In which of the following industries are the firms price-takers?

a.monopoly

b.monopolistically competitive

c.monopoly and monopolistically competitive

d.perfectly competitive

e.perfectly competitive and monopolistically competitive

172.              Which of the following is not a characteristic of a perfectly competitive market structure?

a.The firm is a price-taker.

b.The firm is a profit maximizer.

c.The firm’s demand curve is horizontal.

d.The market demand is downward sloping.

e.The firm can earn an economic profit in the long run.

173.              If new firms enter a perfectly competitive industry, the

a.market supply curve will shift to the left, market price will fall, and industry output
will increase

b.market supply will shift to the left, market price will rise, and the industry output will
increase

c.market demand will shift to the right, market price will increase, and market output
will increase

d.market supply will shift to the right, market price will fall, and market output will
increase

e.market supply will shift to the right, market price will increase, and market output
will decrease