Principles of Microeconomics Exam 3 Chapters 13-14 (Questions and Answers)

Principles of Microeconomics Exam 3 Chapters 13-14 (Questions and Answers) The amount of money that a firm receives from the sale of its output is called - total revenue Total revenue equals - total output multiplied by price per unit of output explicit costs - require an outlay of money by the firm Which of the following is an implicit cost? (i) the owner of a firm forgoing an opportunity to earn a large salary working for a Wall Street brokerage firm (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space a. (ii) and (iii) b. (i) and (iii) c. (i) only d. all of the above are correct - c. (i) only John owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements? a. wages John could earn washing windows b. dividends John's money was earning in the stock market before John sold his stock and bought a shoe-shine booth c. the cost of shoe polish d. all of the above are correct - c. the cost of shoe polish The amount of money that a wheat farmer could have earned if he had planted barley instead of wheat is - an implicit cost Economic profit is equal to (i) total revenue - (explicit costs + implicit costs) (ii) total revenue - opportunity costs (iii) accounting profit + implicit costs - (i) and (ii) accounting profit is equal to (i) total revenue - implicit costs (ii) total revenue - opportunity costs (iii) economic profit + implicit costs - (iii) only Economic profit - will never exceed accounting profit Economists normally assume that the goal of a firm is to - maximize its profit a production function is a relationship between - inputs and quantity of output the marginal product of labor is equal to the - increase in output obtained from a one unit increase in labor one would expect to observe diminishing marginal product of labor when - crowded office space reduces the productivity of new workers Which of these assumption is often realistic for s firm in the short run? a. the firm can vary both the size of its factory and the number of workers it employs b. the firm can vary the size of its factory, but not the number of workers it employs c. the firm can vary the number of workers it employs, but not the size of its factory d. the firm can vary neither the size of its factory not the number of workers it employs - c. the firm can vary the number of workers it employs, but not the size of its factory For a certain firm, the number of workers hired is the only variable input. When this firm's production function is illustrated on a graph? - the number of workers is measured on the horizontal axis and the quantity of output is measured on the vertical axis When a firm's only variable input is labor, then the slope of the production function measures the - marginal product of labor