• 1
  • A firm's opportunity costs ___________________.

    include explicit costs and implicit costs
    increase when economies of scope exist
    do not include implicit costs because implicit costs have no monetary value
    equal its explicit costs

  • 2
  • Lucinda starts a business consulting company. She makes all the business decisions and bears the risk of running the business. Lucinda expects to receive _____________________.

    normal profit
    revenue greater than the capital investment
    revenue greater than her opportunity cost
    economic profit

  • 3
  • Total revenue minus the sum of implicit and explicit costs is equal to _______ profit.


  • 4
  • Emma owns a firm that produces raincoats. Currently, Emma produces 25 raincoats a day. Emma cannot produce more raincoats in a day unless she purchases another sewing machine. Emma is _______ efficient.


  • 5
  • All of the following statements are false except _____________________________.

    economic efficiency implies technological efficiency
    technological efficiency implies the lowest costs of production
    economic efficiency implies maximum output with maximum inputs
    technological efficiency implies economic efficiency

  • 6
  • A major disadvantage of a proprietorship is that ____________________.

    the owner's entire wealth is at risk
    the firm has perpetual life
    the owner has limited liability
    the profits are taxed twice

  • 7
  • The Herfindahl-Hirschman Index is smaller in _______ market than in _______ market.

    a perfectly competitive; a monopolistic
    a monopolistic; a monopolistic competitive
    an oligopolistic; a perfectly competitive
    a monopolistic; a perfectly competitive

  • 8
  • Andy wants to purchase a golden retriever. Andy buys newspapers to read the classified advertisements and he buys dog magazines to check out the locations of golden retriever breeders. Andy has incurred the _______ costs of making a purchase.


  • 9
  • A firm that hires various specialists to work on a range of projects experiences ________________________.

    economies of scope
    increasing normal profit
    increasing economic profit
    economies of scale

  • 10
  • _______ coordinate most of our economic activity because firms can _______.

    Firms and markets; organize efficient team production
    Firms and markets; reap economies of scale
    Markets; have a principal-agent problem
    Firms and not markets; organize efficient team production

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