Exam 9: Decision Making by Individuals and Firms

Suppose a local floral shop has explicit costs of $200,000 per year and implicit costs of $50,000 per year.If the store earned an economic profit of $50,000 last year,the store's accounting profit equaled:

A person who is oversensitive to loss and is unwilling to recognize the loss and move on has:

Economic profits can be negative,even if accounting profits are positive.

In making an "either-or" decision:

One of Jessuina's New Year's resolutions was to exercise more,so she bought an annual membership to the gym that allows unlimited visits.Unfortunately,the gym is so crowded and noisy that Jessuina leaves every day with a headache,without working out at all.According to marginal analysis,Jessuina should:

Constant marginal costs occur when production of each individual unit costs:

Werner installs custom sound systems in cars.If he installs seven systems per day,his total costs are $300.If he installs eight systems per day,his total costs are $400.Werner will install eight sound systems per day only if the eighth customer is willing to pay at least:

If the marginal benefit received from consuming a good is greater than the marginal cost of production:

Money that must be paid for the use of factors of production such as labor and capital is an:

You have rented your first apartment,signing a lease that commits you to pay $500 each month for 12 months.You have an opportunity to take a trip to Europe during the entire month of June,and you will spend $2,000 traveling.Your apartment will be vacant,but because of your lease,you must still pay the rent.The cost of taking the trip to Europe is:

Profit is the difference between _____ and _____.

According to the profit-maximizing principle of marginal analysis,if the marginal benefit is _____ the marginal cost,_____.

To maximize total profit from a particular activity,consumers and firms evaluate each activity at the:

Suppose Joan buys a new refrigerator to replace her old one that suddenly quit working.If Joan buys the model on closeout sale and doesn't take time to do research on repair records and energy efficiency of various other models,she is using:

(Table: The Cost of Producing Gadgets)Use Table: The Cost of Producing Gadgets.According to this table,the marginal cost is:

Accounting profit differs from economic profit because:

Use the following to answer question: -(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of _____ marginal costs.

George owns a dude ranch in Texas.He pays $32,000 per year in insurance,$408,000 in wages,and $23,000 in supplies.He forgoes $32,000 per year he could make as a police officer.His total revenue last year equaled $460,000.That means his economic _____ equaled _____.

Use the following to answer question: -(Figure: Marginal Benefits and Marginal Costs)Use Figure: Marginal Benefits and Marginal Costs.More time spent studying economics adds points to economics scores (MB)but subtracts points from accounting scores (MC).The marginal benefit of studying economics for 4 hours is _____ points,and the marginal cost is _____ points.

Total profit is maximized when marginal benefit _____ marginal cost.