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ECON 101 Exam 3 Study Guide Exam And All Actual Answers.
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1. Jacquelyn is a student at a major state university. Which of the following is NOT an explicit cost of her attending college? A) tuition B) textbooks C) the salary that she could have earned working full-time D) computer lab fees - Answer C) the salary that she could have earned working ful...

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  • October 9, 2024
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ECON 101 Exam 3 Study Guide Exam
And All Actual Answers.
1. Jacquelyn is a student at a major state university. Which of the following is NOT an explicit cost of her
attending college?

A) tuition

B) textbooks

C) the salary that she could have earned working full-time

D) computer lab fees - Answer C) the salary that she could have earned working full-time



2. Which of the following statements about opportunity cost is FALSE?

A) Opportunity cost may be larger than monetary cost.

B) Opportunity cost includes both explicit and implicit costs.

C) The real or opportunity cost of something is what you must give up to get it.

D) Opportunity cost is synonymous with explicit cost. - Answer D) Opportunity cost is synonymous with
explicit cost.



3. After earning your BA, you have to decide whether to take 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 to pay the remaining $22,000 per year, you would have to cash in savings bonds
from your grandparents that have been earning $500 in interest per year. The annual opportunity cost of
earning your MBA is:

A) $67,500.

B) $77,000.

C) $99,000.

D) $77,500. - Answer A) $67,500.



4. You own a small deli that sells sandwiches, salads, and soup. Which of the following is an implicit cost
of the business?

A) wages paid to part-time employees

,B) the job offer you did not accept at a local catering service

C) bread, meat, and vegetables used to produce the items on your menu

D) your monthly utility bill - Answer B) the job offer you did not accept at a local catering service



5. 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 _____ in _____ costs.

A) $86,004; implicit

B) $43,002; implicit

C) $43,002; explicit

D) $86,004; explicit - Answer A) $86,004; implicit



6. If the accounting profit for a firm is negative:

A) the economic profit must be positive.

B) the economic profit must be negative.

C) the firm should produce more.

D) the firm will not owe any taxes. - Answer B) the economic profit must be negative.



7. Profit computed without implicit costs is _____ profit.

A) explicit

B) accounting

C) implicit

D) economic - Answer B) accounting



8. 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, the store's accounting profit equaled:

A) $10,000.

B) $50,000.

C) $100,000.

D) $200,000. - Answer C) $100,000.

, 9. Economic profit is:

A) less than accounting profit if implicit costs exist.

B) always equal to accounting profit.

C) greater than accounting profit if implicit costs exist.

D) less than accounting profit if implicit costs are zero. - Answer A) less than accounting profit if implicit
costs exist.



10. Profit is the difference between _____ and _____.

A) total sales; total revenues

B) total profits; total costs

C) total revenues; total costs

D) marginal costs; marginal revenues - Answer C) total revenues; total costs



11. The _____ is the increase in output that is produced when a firm hires an additional worker.

A) average product

B) total product

C) marginal product

D) marginal cost - Answer C) marginal product



12. The total product curve(or production function):

A) shows the relation between output and the quantity of a variable input for varying

levels of the fixed input.

B) will become flatter as output increases if there are diminishing returns to the variable input.

C) will be downward-sloping if there are diminishing returns to the variable input.

D) will become horizontal when the marginal product of the variable input is constant. - Answer B) will
become flatter as output increases if there are diminishing returns to the variable input.



13. An input whose quantity can be changed in the short run is a(n) _____ input.

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