Question 1

Total costs equal

Accepted Answer

A) Fixed costs 
B) Variable costs 
C) Sunk costs 
D) Fixed plus variable costs 
A) Fixed costs 
B) Variable costs 
C) Sunk costs 
D) Fixed plus variable costs D

Question 2

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $25000/month.If the firm produces 1,000,000 units a month,the total costs equal

Accepted Answer

A) $125,250,000 
B) $170,250,000 
C) $125,050,000 
D) $170,050,000 
A) $125,250,000 
B) $170,250,000 
C) $125,050,000 
D) $170,050,000 B

Question 3

Variable costs are

Accepted Answer

A) costs that vary with output 
B) equal marginal costs 
C) not considered in decision-making 
D) equal to total costs 
A) costs that vary with output 
B) equal marginal costs 
C) not considered in decision-making 
D) equal to total costs A

Question 4

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.After a year,the manager has an opportunity to outsource production to another company at a cost per unity of $1.75.If you are the manager,you

Accepted Answer

A) should consider the $400,000 as sunk cost and therefore it should not be relevant to the decision. 
B) should base your decision upon economic profit and not accounting profit 
C) should avoid the fixed-cost fallacy 
D) all the above 
A) should consider the $400,000 as sunk cost and therefore it should not be relevant to the decision. 
B) should base your decision upon economic profit and not accounting profit 
C) should avoid the fixed-cost fallacy 
D) all the above

Question 5

Susan can bake 200 cookies in an hour or watch her favorite tv show.If she chooses to watch her show,her opportunity cost is

Accepted Answer

A) 200 cookies 
B) 100 cookies 
C) 150 cookies 
D) Need more information 
A) 200 cookies 
B) 100 cookies 
C) 150 cookies 
D) Need more information

Question 6

All of the following are examples of fixed costs,except

Accepted Answer

A) Tax accountant fees 
B) Package designing fees 
C) Insurance 
D) Shipping costs 
A) Tax accountant fees 
B) Package designing fees 
C) Insurance 
D) Shipping costs

Question 7

Economists argue that:

Accepted Answer

A) accounting costs consider all types of costs including implicit costs 
B) there is an opportunity cost associated with all decisions. 
C) economic decisions do not have opportunity costs but other decisions do. 
D) economic decisions should consider sunk costs 
A) accounting costs consider all types of costs including implicit costs 
B) there is an opportunity cost associated with all decisions. 
C) economic decisions do not have opportunity costs but other decisions do. 
D) economic decisions should consider sunk costs

Question 8

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total costs equals

Accepted Answer

A) $5,000 
B) $8,000 
C) $13,000 
D) $3,000 
A) $5,000 
B) $8,000 
C) $13,000 
D) $3,000

Question 9

Economic Value Added helps firms to avoid the hidden-cost fallacy

Accepted Answer

A) by ignoring the opportunity costs to using a capital 
B) by differentiating between sunk and fixed costs 
C) by taking all capital costs into account including the cost of equity 
D) none of the above 
A) by ignoring the opportunity costs to using a capital 
B) by differentiating between sunk and fixed costs 
C) by taking all capital costs into account including the cost of equity 
D) none of the above

Question 10

If a firm is earning negative economic profits,it implies

Accepted Answer

A) That the firm's accounting profits are zero 
B) That the firm's accounting profits are positive 
C) That the firm's accounting profits are negative 
D) More information is needed to conclude about accounting profits 
A) That the firm's accounting profits are zero 
B) That the firm's accounting profits are positive 
C) That the firm's accounting profits are negative 
D) More information is needed to conclude about accounting profits

Question 11

In the long-run,all costs are

Accepted Answer

A) Fixed costs 
B) Variable costs 
C) Sunk Costs 
D) Marginal Costs 
A) Fixed costs 
B) Variable costs 
C) Sunk Costs 
D) Marginal Costs

Question 12

Which of the following statements is true?

Accepted Answer

A) Economic profits ignore implicit costs and revenues. 
B) Although implicit costs do not show up in accounting profits,they nevertheless affect managerial decisions. 
C) Although explicit costs do not show up in accounting profits,they nevertheless affect managerial decisions. 
D) Economists consider sunk costs in their decision making 
A) Economic profits ignore implicit costs and revenues. 
B) Although implicit costs do not show up in accounting profits,they nevertheless affect managerial decisions. 
C) Although explicit costs do not show up in accounting profits,they nevertheless affect managerial decisions. 
D) Economists consider sunk costs in their decision making

Question 13

James used $250,000 from his savings account that paid an annual interest of 15% to purchase a hardware store.After one year,James sold the business for 320,000.An economist calculated his profit to be:

Accepted Answer

A) $320,000 
B) $70,000 
C) $282,500 
D) $32,500 
A) $320,000 
B) $70,000 
C) $282,500 
D) $32,500

Question 14

A professor will sometimes pay higher prices for some goods compared to an undergraduate student because

Accepted Answer

A) They value the item more than the student 
B) They like wasting money 
C) crowded and understaffed discount stores impose higher time costs 
D) they like to show off 
A) They value the item more than the student 
B) They like wasting money 
C) crowded and understaffed discount stores impose higher time costs 
D) they like to show off

Question 15

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.Ceteris peribus,if the firm continues its production in the same economic environment,the firms economic profits should

Accepted Answer

A) increase 
B) decrease 
C) stay the same 
D) increase as long as the investment does not generate implicit costs that are greater than $0.15 per unit 
A) increase 
B) decrease 
C) stay the same 
D) increase as long as the investment does not generate implicit costs that are greater than $0.15 per unit

Question 16

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total variable costs equals

Accepted Answer

A) $5,000 
B) $8,000 
C) $13,000 
D) $10,000 
A) $5,000 
B) $8,000 
C) $13,000 
D) $10,000

Question 17

Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000.His accountant calculated his profit to be:

Accepted Answer

A) $300,000 
B) $100,000 
C) $80,000 
D) $20,000 
A) $300,000 
B) $100,000 
C) $80,000 
D) $20,000

Question 18

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $250,000/month.If the firm produces 1,000,000 units a month,the total fixed costs equal

Accepted Answer

A) $250,000 
B) $50,000 
C) $20,500 
D) $30,000 
A) $250,000 
B) $50,000 
C) $20,500 
D) $30,000

Question 19

If a firm is earning negative accounting profits,it implies

Accepted Answer

A) That the firm's economic profits are zero 
B) That the firm's economic profits are positive 
C) That the firm's economic profits are negative 
D) More information is needed to conclude about economic profits 
A) That the firm's economic profits are zero 
B) That the firm's economic profits are positive 
C) That the firm's economic profits are negative 
D) More information is needed to conclude about economic profits

Question 20

A business owner makes 50 items a day.Each day he/she contributes 8 hours to produce those items.If hired,elsewhere he/she could have earned $10 an hour.The item sells for $10 each.Production does not stop during weekends.If the explicit costs total $10,000 for 30 days,the economic profit for the month equals:

Accepted Answer

A) $2,600 
B) $2,240 
C) $11,760 
D) $5,000 
A) $2,600 
B) $2,240 
C) $11,760 
D) $5,000

Total costs equal

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $25000/month.If the firm produces 1,000,000 units a month,the total costs equal

Variable costs are

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.After a year,the manager has an opportunity to outsource production to another company at a cost per unity of $1.75.If you are the manager,you

Susan can bake 200 cookies in an hour or watch her favorite tv show.If she chooses to watch her show,her opportunity cost is

All of the following are examples of fixed costs,except

Economists argue that:

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total costs equals

Economic Value Added helps firms to avoid the hidden-cost fallacy

If a firm is earning negative economic profits,it implies

In the long-run,all costs are

Which of the following statements is true?

James used $250,000 from his savings account that paid an annual interest of 15% to purchase a hardware store.After one year,James sold the business for 320,000.An economist calculated his profit to be:

A professor will sometimes pay higher prices for some goods compared to an undergraduate student because

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.Ceteris peribus,if the firm continues its production in the same economic environment,the firms economic profits should

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total variable costs equals

Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000.His accountant calculated his profit to be:

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $250,000/month.If the firm produces 1,000,000 units a month,the total fixed costs equal

If a firm is earning negative accounting profits,it implies

The One Lessor of Business

Extent How Muchdecisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long-Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 3: Benefits, Costs, and Decisions

Total costs equal

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $25000/month.If the firm produces 1,000,000 units a month,the total costs equal

Variable costs are

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.After a year,the manager has an opportunity to outsource production to another company at a cost per unity of $1.75.If you are the manager,you

Susan can bake 200 cookies in an hour or watch her favorite tv show.If she chooses to watch her show,her opportunity cost is

All of the following are examples of fixed costs,except

Economists argue that:

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total costs equals

Economic Value Added helps firms to avoid the hidden-cost fallacy

If a firm is earning negative economic profits,it implies

In the long-run,all costs are

Which of the following statements is true?

James used $250,000 from his savings account that paid an annual interest of 15% to purchase a hardware store.After one year,James sold the business for 320,000.An economist calculated his profit to be:

A professor will sometimes pay higher prices for some goods compared to an undergraduate student because

A manager invests $400,000 in a technology to reduce overall costs of production.The company managed to reduce their cost per unit from $2 to $1.85.Ceteris peribus,if the firm continues its production in the same economic environment,the firms economic profits should

A business incurs the following costs per unit: Labor - $5/unit;Materials $3/unit and rent - $5000/month.If the firm produces 1000 units a month,the total variable costs equals

Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000.His accountant calculated his profit to be:

A business incurs the following costs per unit: Labor - $125/unit;Materials $45/unit and rent - $250,000/month.If the firm produces 1,000,000 units a month,the total fixed costs equal

If a firm is earning negative accounting profits,it implies

The One Lessor of Business

Extent How Muchdecisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long-Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters