Complete Chapters ✅
Chapter 01 14e
Complete Answers ✅
1. Award: 10.00 points
Economic theory is a valuable tool for business decision-making because it
identifies for managers the essential information for making a decision.
assumes away the problem.
creates a realistic, complex model of the business firm.
provides an easy solution to complex business problems.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-01
2. Award: 10.00 points
Economic profit
is a theoretical measure of a firm's performance and has little value in real-world decision-
making.
can be calculated by subtracting implicit costs of using owner-supplied resources from the
firm's total revenue.
is negative when total costs exceed total revenues.
is generally larger than accounting profit.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
,3. Award: 10.00 points
Economic profit is the difference between
total revenue and the opportunity cost of all of the resources used in production.
total revenue and the implicit costs of using owner-supplied resources.
accounting profit and the opportunity cost of the market-supplied resources used by the
firm.
accounting profit and explicit costs.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
4. Award: 10.00 points
When economic profit is positive,
total revenue exceeds total economic cost.
the firm's owners have successfully solved the principle-agent problem.
the firm's owners experience a decrease in their wealth.
foreign companies experience loss of market share
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
,5. Award: 10.00 points
Consider a firm that employs some resources that are owned by the firm. When accounting profit is
zero, economic profit
must also equal zero.
is sure to be positive.
must be negative and shareholder wealth is reduced.
cannot be computed accurately, but the firm is breaking even nonetheless.
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
6. Award: 10.00 points
Which of the following statements is false?
Explicit costs of using market-supplied resources entail an opportunity cost equal to the
dollar cost of obtaining the resources in the market.
When economic profit is zero, the firm's owners could not have done better putting their
resources in some other industry of comparable risk.
If economic profit is positive, accounting profit must also be positive.
If economic profit is negative, accounting profit must also be negative.
None of the statements are false.
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
, 7. Award: 10.00 points
The value of a firm is
smaller the higher is the risk premium used to compute the firm's value.
larger the higher is the risk premium used to compute the firm's value.
the price for which the firm can be sold minus the present value of the expected future
profits.
both "larger the higher is the risk premium used to compute the firm’s value" and "the price
for which the firm can be sold minus the present value of the expected future profits".
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
8. Award: 10.00 points
Suppose Marv, the owner-manager of Marv's Hot Dogs, earned $122,000 in revenue last year.
Marv's explicit costs of operation totalled $36,000. Marv has a Bachelor of Science degree in
mechanical engineering and could be earning $80,000 annually as mechanical engineer. Based on
this information, what must be true?
Marv's implicit cost of using owner-supplied resources is $36,000.
Marv's economic profit is $36,000.
Marv's implicit cost of using owner-supplied resources is $30,000.
Marv's economic profit is $6,000.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
Chapter 01 14e
Complete Answers ✅
1. Award: 10.00 points
Economic theory is a valuable tool for business decision-making because it
identifies for managers the essential information for making a decision.
assumes away the problem.
creates a realistic, complex model of the business firm.
provides an easy solution to complex business problems.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-01
2. Award: 10.00 points
Economic profit
is a theoretical measure of a firm's performance and has little value in real-world decision-
making.
can be calculated by subtracting implicit costs of using owner-supplied resources from the
firm's total revenue.
is negative when total costs exceed total revenues.
is generally larger than accounting profit.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
,3. Award: 10.00 points
Economic profit is the difference between
total revenue and the opportunity cost of all of the resources used in production.
total revenue and the implicit costs of using owner-supplied resources.
accounting profit and the opportunity cost of the market-supplied resources used by the
firm.
accounting profit and explicit costs.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
4. Award: 10.00 points
When economic profit is positive,
total revenue exceeds total economic cost.
the firm's owners have successfully solved the principle-agent problem.
the firm's owners experience a decrease in their wealth.
foreign companies experience loss of market share
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
,5. Award: 10.00 points
Consider a firm that employs some resources that are owned by the firm. When accounting profit is
zero, economic profit
must also equal zero.
is sure to be positive.
must be negative and shareholder wealth is reduced.
cannot be computed accurately, but the firm is breaking even nonetheless.
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
6. Award: 10.00 points
Which of the following statements is false?
Explicit costs of using market-supplied resources entail an opportunity cost equal to the
dollar cost of obtaining the resources in the market.
When economic profit is zero, the firm's owners could not have done better putting their
resources in some other industry of comparable risk.
If economic profit is positive, accounting profit must also be positive.
If economic profit is negative, accounting profit must also be negative.
None of the statements are false.
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
, 7. Award: 10.00 points
The value of a firm is
smaller the higher is the risk premium used to compute the firm's value.
larger the higher is the risk premium used to compute the firm's value.
the price for which the firm can be sold minus the present value of the expected future
profits.
both "larger the higher is the risk premium used to compute the firm’s value" and "the price
for which the firm can be sold minus the present value of the expected future profits".
References
Multiple Choice Difficulty: 02 Learning Objective: 01-02
Medium
8. Award: 10.00 points
Suppose Marv, the owner-manager of Marv's Hot Dogs, earned $122,000 in revenue last year.
Marv's explicit costs of operation totalled $36,000. Marv has a Bachelor of Science degree in
mechanical engineering and could be earning $80,000 annually as mechanical engineer. Based on
this information, what must be true?
Marv's implicit cost of using owner-supplied resources is $36,000.
Marv's economic profit is $36,000.
Marv's implicit cost of using owner-supplied resources is $30,000.
Marv's economic profit is $6,000.
References
Multiple Choice Difficulty: 01 Easy Learning Objective: 01-02
