POLS 207 Exam Graded
The demand curve faced by the individual perfectly competitive firm is: - Answer-
vertical.
downward sloping.
upward sloping.
horizontal.
Being a price taker essentially means
a firm can influence the market price.
the firm cannot legally set its price above the market price.
a firm cannot influence the market price.
the firm cannot legally set its price below the market price. - Answer- a firm cannot
influence the market price.
Fixed costs are
not actually costs since they do not affect the decisions of a firm.
costs that never change.
costs that a firm incurs even when output is zero.
costs that increase at a constant rate when output increases. - Answer- costs that a firm
incurs even when output is zero.
Which is the best example of a firm's implicit costs?
taxes
wages
the opportunity cost of owner-provided labor
rent - Answer- the opportunity cost of owner-provided labor
rent
From the managers perspective,
only explicit costs matter because accounting profit is based on explicit costs.
, there is no difference between implicit and explicit costs. As such, treating implicit costs
as explicit would result in double counting and an overstatement of total costs.
implicit costs are simply a theoretical construct and should be ignored in the decision-
making process.
it is important to treat implicit costs as explicit in order to make sound strategic
decisions. - Answer- it is important to treat implicit costs as explicit in order to make
sound strategic decisions.
If your business earns $20,000 in revenues, has explicit costs of $7,000, and implicit
costs of $5,000, your accounting profit is
$13,000.
$8,000.
$32,000.
-$8,000. - Answer- $13,000
The main difference between the short run and the long run is that
in the long run, the firm is making a constrained decision about how to use existing plant
and equipment efficiently.
in the short run, at least one of the firm's input levels is fixed.
in the short run all inputs are fixed, while in the long run all inputs are variable.
in the short run the firm varies all of its inputs to find the least-cost combination of
inputs. - Answer- in the short run, at least one of the firm's input levels is fixed.
An implicit cost is defined as:
the opportunity cost of using a resource that is not explicitly paid out by the firm.
the difference between an input's explicit cost and its actual cost.
the amount by which the money spent on an input to production exceeds its opportunity
cost.
the amount by which economic profit exceeds accounting profit. - Answer- the
opportunity cost of using a resource that is not explicitly paid out by the firm.
McDonald's is a fast-food restaurant chain. Which of the following would be a long-run
decision for McDonald's?
supply more hamburgers in one restaurant
The demand curve faced by the individual perfectly competitive firm is: - Answer-
vertical.
downward sloping.
upward sloping.
horizontal.
Being a price taker essentially means
a firm can influence the market price.
the firm cannot legally set its price above the market price.
a firm cannot influence the market price.
the firm cannot legally set its price below the market price. - Answer- a firm cannot
influence the market price.
Fixed costs are
not actually costs since they do not affect the decisions of a firm.
costs that never change.
costs that a firm incurs even when output is zero.
costs that increase at a constant rate when output increases. - Answer- costs that a firm
incurs even when output is zero.
Which is the best example of a firm's implicit costs?
taxes
wages
the opportunity cost of owner-provided labor
rent - Answer- the opportunity cost of owner-provided labor
rent
From the managers perspective,
only explicit costs matter because accounting profit is based on explicit costs.
, there is no difference between implicit and explicit costs. As such, treating implicit costs
as explicit would result in double counting and an overstatement of total costs.
implicit costs are simply a theoretical construct and should be ignored in the decision-
making process.
it is important to treat implicit costs as explicit in order to make sound strategic
decisions. - Answer- it is important to treat implicit costs as explicit in order to make
sound strategic decisions.
If your business earns $20,000 in revenues, has explicit costs of $7,000, and implicit
costs of $5,000, your accounting profit is
$13,000.
$8,000.
$32,000.
-$8,000. - Answer- $13,000
The main difference between the short run and the long run is that
in the long run, the firm is making a constrained decision about how to use existing plant
and equipment efficiently.
in the short run, at least one of the firm's input levels is fixed.
in the short run all inputs are fixed, while in the long run all inputs are variable.
in the short run the firm varies all of its inputs to find the least-cost combination of
inputs. - Answer- in the short run, at least one of the firm's input levels is fixed.
An implicit cost is defined as:
the opportunity cost of using a resource that is not explicitly paid out by the firm.
the difference between an input's explicit cost and its actual cost.
the amount by which the money spent on an input to production exceeds its opportunity
cost.
the amount by which economic profit exceeds accounting profit. - Answer- the
opportunity cost of using a resource that is not explicitly paid out by the firm.
McDonald's is a fast-food restaurant chain. Which of the following would be a long-run
decision for McDonald's?
supply more hamburgers in one restaurant
