Unlike implicit costs, explicit costs a.reflect opportunity costs b.include the value

  Unlike implicit costs, explicit costs

a.reflect opportunity costs

b.include the value of the owner’s time

c.are not included in the accounting statement of the firm

d.are actual cash payments

e.do not change with the output rate of the firm

132.              Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his
                            current job, which pays $20,000 a year, and use a building that he owns and currently
                            rents to his brother for $6,000 a year. His costs at the sushi bar would be $50,000 for food
                            and $2,000 for gas and electricity. What are his explicit costs?

a.$26,000

b.$66,000

c.$78,000

d.$52,000

e.$72,000

133.              Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his
                            current job, which pays $20,000 a year, and use a building that he owns and currently
                            rents to his brother for $6,000 a year. His costs at the sushi bar would be $50,000 for food
                            and $2,000 for gas and electricity. What are his implicit costs?

a.$26,000

b.$66,000

c.$78,000

d.$52,000

e.$72,000

134.              Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his
                            current job, which pays $20,000 a year, and take over a store building he owns and
                            currently rents for $6,000 a year. His costs at the sushi bar would be $50,000 for food
                            and $2,000 for gas and electricity. What is the minimum revenue he must earn per year in
                            order for it to be worth his while to open his sushi bar?

a.$26,000

b.$66,000

c.$78,000

d.$52,000

e.$72,000

135.              Two friends, Diane and Stan, own and run a bar. Diane tends bar on Monday,
                            Wednesday, and Friday and receives a wage in addition to tips. Stan tends bar on
                            Tuesday, Thursday, and Saturday and receives only tips. Which of the following
                            represents an implicit cost of operating the bar?

a.Diane’s wage

b.Stan’s time

c.Diane’s tips

d.Stan’s tips

e.both Diane’s and Stan’s tips

136.              Economic profit is a key term in economics and is defined as total revenue

a.plus total cost

b.minus marginal cost

c.minus variable cost

d.minus total cost

e.minus fixed cost

137.              Suppose Ernie gives up his job as a financial advisor for pets, for which he earned $30,000
                            per year, to open up a store selling spot remover to Dalmatians. He invested $10,000 of
                            his savings, which had been earning 5 percent interest. This year’s revenues in the new
                            business were $50,000 and explicit costs were $10,000. Calculate Ernie’s economic
                            profit.

a.$10,000

b.$50,000

c.$20,000

d.$40,000

e.$9,500

138.              In perfect competition, an economic profit can be earned

a.only in the long run

b.only if the firm is efficient

c.only in the short run

d.never

e.always

139.              The goal of any monopolist is to maximize

a.economic profit

b.normal profit

c.price

d.efficiency

e.output

140.              A monopoly

a.can increase the price and increase output at the same time

b.can charge any price it wants and still sell all of its output

c.can sell any output it produces provided it accepts the market price

d.must lower the price in order to increase output

e.faces a perfectly elastic demand curve