Econ Chapter 7 Study Guide Test.

Econ Chapter 7 Study Guide Test. Abdul operates his own business and pays himself a salary of $20,000 per year. He refused a job that pays $25,000 per year. What is the opportunity cost of Abdul's time in the business? - correct answer 25 000 If you borrow money from the bank to start up a business, the interest you pay to the bank is - correct answer not included in the calculation of accountant profits. or An obvious cost Implicit costs incurred by a firm are the firm's - correct answer opportunity costs. Joanna borrows $16,000 from her father to open her accounting practice. She cashed in a $20,000 savings bond that paid her 2% per year. Joanna agrees to pay her Dad interest of 1% per year. CIBC bank would have loaned Joanna the money, but at an interest rate of 7% per year. Joanna's explicit costs of this loan from her Dad are Part 2 A. $1,280. B. $160. C. $320. D. $1,120. - correct answer 160 One night Zabeen and Francis decided to open a chocolate cheesecake bakery. Zabeen cashed in a $10,000savings deposit that was paying 3% interest per year. Francis sold a $10,000 bond that was paying 4% interest per year. They also borrowed $1000 on their VISA cards for a year at 21% per year. Financing the chocolate cheesecake bakery in this way has implicit costs of - correct answer 700 Christine wants to sell you a raffle ticket. There is a 1−in−100 chance that you will win $1,000. With this raffle, your expected winnings are Part 2 - correct answer 10 If you borrow money from the bank to start up a business, the interest you pay to the bank is - correct answer subtracted from revenues to determine accounting profits. The definition of economic profits can also be written as A. Economic Profits + Implicit Costs. B. Accounting Profits − Hidden Opportunity Costs. C. Revenues − Obvious Costs. D. Economic Profits + Hidden Opportunity Costs. - correct answer The definition of accounting profits can also be written as