exam set 3

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  1. What is the difference between accounting profit and economic​ profit?
    Economic profit subtracts both explicit and implicit costs from total​ revenue, while accounting profit only subtracts explicit costs.
  2. Is it possible for accounting profit to be positive and economic profit to be​ negative?
    ​Yes, this could occur if explicit costs were modest and implicit costs were high.
  3. Under which of the following examples is it likely that the accounting profit is positive and the economic profit is​ negative?
    If you open an amusement park in the middle of New York City.
  4. The​ "hundred billion​ dollars" that Senator Nelson is referring to is known as
    a sunk cost
  5. Given this​ information, the​ senator's comment is____, since these types of costs ____ affect current and future
    flawed, should not
  6. Producer surplus is the difference between the ___ and the  ____
    price consumer pay, supply curve
  7. Which of the following statements is true of a perfectly competitive​ market?
    There is free entry and exit in the market.
  8. Which of the following statements identifies the difference between variable costs and fixed​ costs?
    Variable costs of a firm are zero after it shut​ downs, whereas it continues to incur the fixed costs of production in the short run.
  9. Which of the following is true about price elasticity of​ supply?
    Price elasticity of supply​ = Percentage change in quantity supplied​ / Percentage change in price
  10. Free entry is said to exist in an industry​ when:
    entry is unfettered by any special legal or technical barriers.
  11. Based on your understanding of how the invisible hand​ works, what do you think should be done to correct this​ problem?
    Cab fares should be allowed to increase.

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exam set 3
2017-03-14 18:01:51

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