Econ 306 Final Exam

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ECON 306 Final Exam Click Link Below To Buy: 1. Which of the following constitutes an implicit cost to the Johnston Manufacturing Company? a. Payments of wages to its office workers. b. Rent paid for the use of equipment owned by the Schultz Machinery Company. c. Use of savings to pay operating expenses instead of generating interest income. d. Economic profits resulting from current production. 2. Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting: a. profits were $100,000 and its economic profits were zero. b. losses were $500,000 and its…show more content…
earning normal profits. b. earning economic profits. c. breaking even. d. earning accounting profits. 15. A purely competitive firm: a. must earn a normal profit in the short run. b. cannot earn economic profit in the long run. c. may realize either economic profit or losses in the long run. d. cannot earn economic profit in the short run. 16. A purely competitive firm is precluded from making economic profits in the long run because: a. it is a "price taker." b. its demand curve is perfectly elastic. c. of unimpeded entry to the industry. d. it produces a differentiated product. 17. Suppose losses cause industry X to contract and, as a result, the prices of relevant inputs decline. Industry X is: a. a constant-cost industry. b. a decreasing-cost industry. c. an increasing-cost industry. d. encountering X-inefficiency. 18. Refer to the diagram. Line (1) reflects a situation where resource prices: a. decline as industry output expands. b. increase as industry output expands. c. remain constant as industry output expands. d. are unaffected by the level of output in the industry. 19. Pure monopolists may obtain economic profits in the long run because: a. of advertising. b. marginal revenue is constant as sales increase. c. of barriers to entry. d. of rising average fixed costs. 20. Refer to the diagram. If price is reduced from P1 to P2, total revenue will: a. increase by

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