ECO 202 UPDATED Questions and
CORRECT Answers
Harvey quit his job at State University where he earned $45,000 a year. He figures his
entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the
business, he cashed in $100,000 in bonds that earned 10 percent int...
ECO 202 UPDATED Questions and
CORRECT Answers
Harvey quit his job at State University where he earned $45,000 a year. He figures his
entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the
business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a
software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software
at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging,
marketing, employee wages and benefits, and rent on a building.Refer to the above
information. The economic profits of Harvey's firm in the first year were:
A.
$155,000
B.
$160,000
C.
$220,000
D.
$280,000 - CORRECT ANSWER- ✔✔$160,000
If a firm's revenues just cover all its opportunity costs, then:
A.
Normal profit is zero
B.
Economic profit is zero
C.
Total revenues equal its explicit costs
, D.
Total revenues equal its implicit costs - CORRECT ANSWER- ✔✔Economic profit is zero
Marginal product of labor refers to the:
A.
Last unit of output produced by labor at the end of each period
B.
Increase in output resulting from employing one more unit of labor
C.
Total output divided by the number of labor employed
D.
Smallest unit of the output produced by labor - CORRECT ANSWER- ✔✔Increase in output
resulting from employing one more unit of labor
28.
Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to
produce it. Which of the following statements is definitely true?
A.
The firm will earn positive accounting and economic profits
B.
The firm will face accounting and economic losses
C.
The firm will face an accounting loss, but earn positive economic profits
D.
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