ECON 2102 Chapter 7 2025/2026 Exam
Questions and Answers | A+ Score
Assured
explicit costs - 🧠ANSWER ✔✔the actual payments a firm makes to its
factors of production and other suppliers
accounting profit - 🧠ANSWER ✔✔total revenue - explicit costs
Implicit costs - 🧠ANSWER ✔✔the opportunity costs of the resources
supplied by the firm's owners
economic profit (or excess profit) - 🧠ANSWER ✔✔total revenue - explicit
costs - implicit costs
normal profit - 🧠ANSWER ✔✔the opportunity cost of the resources supplied
by the firm's owners, equal to accounting profit minus economic profit
economic loss - 🧠ANSWER ✔✔an economic profit that is less than zero
, rationing function of price - 🧠ANSWER ✔✔changes in prices distribute
scarce goods to those consumers who value them most highly
allocative function of price - 🧠ANSWER ✔✔changes in prices direct
resources away from overcrowded markets and toward markets that are
underserved
invisible hand theory - 🧠ANSWER ✔✔Adam Smith's theory that the actions
of independent, self-interested buyers and sellers will often result in the
most efficient allocation of resources
In the long run, new firms will enter a market if existing firms are earning a
___ - 🧠ANSWER ✔✔positive economic profit
Any force that prevents firms from entering a new market is called a ___ to
entry - 🧠ANSWER ✔✔barrier
If the firms in a market are earning a positive economic profit, then in the
long run, ___ the market will lead economic profit to ___. - 🧠ANSWER ✔✔>
entry into
> fall
Questions and Answers | A+ Score
Assured
explicit costs - 🧠ANSWER ✔✔the actual payments a firm makes to its
factors of production and other suppliers
accounting profit - 🧠ANSWER ✔✔total revenue - explicit costs
Implicit costs - 🧠ANSWER ✔✔the opportunity costs of the resources
supplied by the firm's owners
economic profit (or excess profit) - 🧠ANSWER ✔✔total revenue - explicit
costs - implicit costs
normal profit - 🧠ANSWER ✔✔the opportunity cost of the resources supplied
by the firm's owners, equal to accounting profit minus economic profit
economic loss - 🧠ANSWER ✔✔an economic profit that is less than zero
, rationing function of price - 🧠ANSWER ✔✔changes in prices distribute
scarce goods to those consumers who value them most highly
allocative function of price - 🧠ANSWER ✔✔changes in prices direct
resources away from overcrowded markets and toward markets that are
underserved
invisible hand theory - 🧠ANSWER ✔✔Adam Smith's theory that the actions
of independent, self-interested buyers and sellers will often result in the
most efficient allocation of resources
In the long run, new firms will enter a market if existing firms are earning a
___ - 🧠ANSWER ✔✔positive economic profit
Any force that prevents firms from entering a new market is called a ___ to
entry - 🧠ANSWER ✔✔barrier
If the firms in a market are earning a positive economic profit, then in the
long run, ___ the market will lead economic profit to ___. - 🧠ANSWER ✔✔>
entry into
> fall
