279 280 281 282 Jacquelyn is a student at a major state university Which of the following is not an example of an explicit cost of her attending college tuition Incorrect textbooks Incorrect the salary that she could have earned working full time True Answer Correct computer lab fees Incorrect Which of the following statements about opportunity cost is not true Opportunity cost may be larger than monetary cost Incorrect Opportunity cost includes both explicit and implicit costs Incorrect The real or opportunity cost of something is what you must give up to get it Incorrect Opportunity cost is synonymous with explicit costs True Answer Correct After earning your BA you have to decide whether to accept the offer of a job that will pay you 45 000 per year or spend an additional two years earning an MBA If you decide to pursue the graduate degree your annual expenses for tuition books board and lodging will be 32 000 You have been offered a scholarship for 10 000 per year but in order to pay the remaining 22 000 per year you would have to cash in savings bonds that your grandparents have given you that have been earning 500 in interest per year The annual opportunity cost of earning your MBA is 67 500 True Answer Correct 77 000 Incorrect 99 000 Incorrect 77 500 Incorrect Money that must be paid for the use of factors of production such as labor and capital is an explicit cost True Answer Correct accounting profit Incorrect implicit cost Incorrect economic profit Incorrect 283 284 285 286 287 Costs that are included in the economic concept of cost but that are not explicit costs are outlay costs Incorrect accounting profits Incorrect implicit costs True Answer Correct economic profits Incorrect Expenses associated with factors of production may be implicit costs Incorrect opportunity costs Incorrect explicit costs Incorrect implicit costs opportunity costs or explicit costs True Answer Correct Accountants use only costs in their computations of cost opportunity Incorrect implicit Incorrect explicit True Answer Correct variable Incorrect You own a small deli that sells sandwiches salads and soup to the community Which of the following is an implicit cost of the business wages paid to part time employees Incorrect the job offer you did not accept at a local catering service True Answer Correct bread meat and vegetables used to produce the items on your menu Incorrect your monthly utility bill Incorrect The implicit cost of capital is the expense associated with leasing machines Incorrect the expense associated with buying machines Incorrect the opportunity cost of capital used by a business True Answer Correct irrelevant for determining economic profit Incorrect 288 289 290 Suppose the Chicago Cubs could rent out Wrigley Field the field the players play on to local youth leagues for 11 000 per month The 11 000 per month reflects the of capital implicit cost True Answer Correct explicit cost Incorrect direct cost Incorrect total cost Incorrect In central Florida the demand for real estate has been increasing rapidly for years This reality in combination with occasional freezes that kill orange trees has led many orange grove owners to sell their land to real estate developers Because of the freezes and land demand the cost of capital is in central Florida s orange groves explicit decreasing Incorrect implicit increasing True Answer Correct implicit decreasing Incorrect explicit increasing Incorrect Sarah s accountant tells her that she made a profit of 43 002 running a pottery studio in Orlando Sarah s husband an economist claims Sarah lost 43 002 running her pottery studio This means her husband is claiming that she incurred 86 004 implicit True Answer Correct 43 002 implicit Incorrect 43 002 explicit Incorrect 86 004 explicit Incorrect in costs 291 Accounting profit differs from economic profit because of differences in the manner in which revenue is calculated Incorrect economic costs include depreciation while accounting costs do not Incorrect accounting costs are generally higher than economic costs because accounting costs include explicit and implicit costs while economic costs include only explicit costs Incorrect economic costs are generally higher than accounting costs because economic costs include all opportunity costs while accounting costs include explicit costs only True Answer Correct 292 293 294 295 296 If the accounting profit for a firm is negative the economic profit must be positive Incorrect the economic profit must be negative True Answer Correct the firm should produce more Incorrect the firm will not owe any taxes to the government Incorrect Suppose a local hardware store has explicit costs of 2 million per year and implicit costs of 44 000 per year If the store earned an economic profit of 50 000 last year this means that the store s accounting profit equaled 94 000 True Answer Correct 6 000 Incorrect 2 050 000 Incorrect 2 044 000 Incorrect Part of the associated with the Chicago Cubs baseball team is the value of batting cages labor Incorrect land Incorrect capital True Answer Correct entrepreneurship Incorrect For most firms economic profit is less than accounting profit True Answer Correct equal to accounting profit Incorrect greater than accounting profit Incorrect negative Incorrect Profit computed using explicit costs as the only measure of costs is explicit profit Incorrect accounting profit True Answer Correct implicit profit Incorrect economic profit Incorrect 297 The implicit cost of capital is the explicit cost of capital that the firm might have used but 298 299 300 301 didn t need to Incorrect depreciation Incorrect the opportunity cost of the capital used by a business True Answer Correct the cost of human capital Incorrect 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 this means that the store s accounting profit equaled 10 000 Incorrect 50 000 Incorrect 100 000 True Answer Correct 200 000 Incorrect The dormitories of Eastland College are part of its land Incorrect labor Incorrect capital True Answer Correct explicit costs Incorrect Suppose Eastland College does not have a summer program and could rent out the campus to various summer sports camps for 100 000 The potential revenue of the summer camps represents an implicit cost of capital True Answer Correct an explicit cost Incorrect a total cost Incorrect a sunk cost Incorrect
View Full Document
Unlocking...