Economic profit is:
a. total revenues minus variable costs.
b. total revenues minus private costs.
c. total revenues minus explicit costs.
d. total revenues minus total costs.
QUESTION 2Identify an example of a stock variable.
a. The growth in investment in an economy
b. The change in the price level in an economy over the years
c. The number of unemployed people in an economy in a particular year
d. The increase in the money supply in an economy
e. The fall in consumer spending during two consecutive years
QUESTION 3Product differentiation:
a. refers to the attempt of firms to make their products look like those of the other firms in the industry.
b. refers to the attempt of firms to make real or apparent differences in essentially substitutable products look different in the minds of the consumers.
c. refers to the advantage big firms have in research and development.
d. is a common characteristic of a perfectly competitive market structure.
e. is only employed in a monopoly market structure.
QUESTION 4Which of the following is most likely to be true of economic and accounting profits?
a. Economic profits are less than accounting profits.
b. Accounting profits are less than economic profits.
c. Economic profits plus accounting profits equal zero.
d. Accounting profits minus economic profits equal zero.
QUESTION 5Which of the following is a flow variable?
a. Price level
b. U.S. population
c. Money supply
d. Investment spending
e. Household debt
QUESTION 6Which of the following is true about advertising by a firm?
a. It is not always successful in increasing demand for a firm's product.
b. It attempts to increase demand and to make demand more inelastic.
c. It may reduce per unit costs of production when economies of scale are experienced.
d. All of these.
QUESTION 7The sum of the explicit and implicit costs incurred in the production process is called:
a. fixed cost.
b. sunk cost.
c. marginal cost.
d. total cost.
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