ECN Exam 3 Study Guide 2026 | Economics Review, Practice Questions & Test
Prep
inputs such as wages and salaries to its employees, whereas implicit costs are non-expenditure
costs that occur through the use of self owned resources such as foregone income. - ANS
✔✔Explicit costs are payments the firm makes for
tuition costs and the cost of books, whereas the implicit costs include foregone income - ANS
✔✔The explicit costs of going to college include
True - ANS ✔✔T or F: Accounting profit equals sales revenue minus explicit costs.
this is the amount required to ensure continued supply of the product. - ANS ✔✔A normal
profit is considered a cost because
variable cost - ANS ✔✔Advertising expenditures, fuel, shipping charges, and wage payments are
examples of what type of cost?
fixed cost - ANS ✔✔Interest on company-issued bonds, real estate taxes, executive salaries, and
insurance premiums are examples of what type of cost?
the variable cost of the trip, the opportunity cost of time, and the need for transportation in
Florida. - ANS ✔✔You are considering whether to drive your car or fly 1,000 miles to Florida for
spring break. In making your decision you should consider
$300; negative $100 - ANS ✔✔Linda sells 100 bottles of homemade ketchup for $10 each. The
cost of the ingredients, the bottles, and the labels was $700. In addition, it took her 20 hours to
make the ketchup and to do so she took time off from a job that paid her $20 per hour. Linda's
accounting profit is _____________ while her economic profit is ______________.
, Long-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: Wendy's
builds a new restaurant
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: Harley-
Davidson Corporation hires 200 more production workers
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: A farmer
increases the amount of fertilizer used on his corn crop:
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: An Alcoa
aluminum plant adds a third shift of workers
false - ANS ✔✔True or false. The U shape of the long-run ATC curve is the result of diminishing
returns.
-Very large number of firms
-No control over price
-No nonprice competition - ANS ✔✔Characteristics of Pure competition
-Differentiated products
-Many firms
-Some price control - ANS ✔✔Characteristics of Pure monopoly
-Few firms
-Standardized products
-Many obstacles to entry - ANS ✔✔Characteristics of oligopoly
Prep
inputs such as wages and salaries to its employees, whereas implicit costs are non-expenditure
costs that occur through the use of self owned resources such as foregone income. - ANS
✔✔Explicit costs are payments the firm makes for
tuition costs and the cost of books, whereas the implicit costs include foregone income - ANS
✔✔The explicit costs of going to college include
True - ANS ✔✔T or F: Accounting profit equals sales revenue minus explicit costs.
this is the amount required to ensure continued supply of the product. - ANS ✔✔A normal
profit is considered a cost because
variable cost - ANS ✔✔Advertising expenditures, fuel, shipping charges, and wage payments are
examples of what type of cost?
fixed cost - ANS ✔✔Interest on company-issued bonds, real estate taxes, executive salaries, and
insurance premiums are examples of what type of cost?
the variable cost of the trip, the opportunity cost of time, and the need for transportation in
Florida. - ANS ✔✔You are considering whether to drive your car or fly 1,000 miles to Florida for
spring break. In making your decision you should consider
$300; negative $100 - ANS ✔✔Linda sells 100 bottles of homemade ketchup for $10 each. The
cost of the ingredients, the bottles, and the labels was $700. In addition, it took her 20 hours to
make the ketchup and to do so she took time off from a job that paid her $20 per hour. Linda's
accounting profit is _____________ while her economic profit is ______________.
, Long-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: Wendy's
builds a new restaurant
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: Harley-
Davidson Corporation hires 200 more production workers
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: A farmer
increases the amount of fertilizer used on his corn crop:
Short-run adjustment - ANS ✔✔Is this example a short-run or long-run adjustment: An Alcoa
aluminum plant adds a third shift of workers
false - ANS ✔✔True or false. The U shape of the long-run ATC curve is the result of diminishing
returns.
-Very large number of firms
-No control over price
-No nonprice competition - ANS ✔✔Characteristics of Pure competition
-Differentiated products
-Many firms
-Some price control - ANS ✔✔Characteristics of Pure monopoly
-Few firms
-Standardized products
-Many obstacles to entry - ANS ✔✔Characteristics of oligopoly
