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John Church Ch. excersizes 6, 8

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Accounting profit differs from economic profit because:
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economic costs are generally higher than accounting costs because economic costs include all opportunity costs, while accounting costs include explicit costs only.
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Profit computed using explicit costs as the only measure of costs is:
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accounting profit
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The costs economists use in the concept of economic profit are:
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accounting costs and opportunity costs (i.e., the value of the best opportunity forgone).
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Profit is the difference between ________ and ________.
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total revenues; total costs
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The amount by which an additional unit of an activity increases total cost is:
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marginal cost.
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According to the optimal output rule, if marginal benefit:
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is equal to marginal cost, net benefit is maximized.
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In economics a “marginal” value refers to:
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the value associated with one more unit of an activity.
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Pauli’s Pizza offers the following prices: one slice for $2, two slices for $3.50, three slices for $4.50, four slices for $5.00. The marginal cost to the customer of the third slice is:
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$1.00
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Suppose Bob has a part-time business washing cars. He has washed nine cars on a given day; the marginal benefit of washing the tenth car is $20 and the marginal cost is $12. Bob should:
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wash the tenth car.
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Total net gain is maximized when marginal benefit ________ marginal cost.
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is equal to
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If a local California avocado stand operates in a perfectly competitive market, that stand owner will be a:
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price taker
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All except one of the following are characteristics of perfect competition. Which is the exception?
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There are many producers; one firm has a 25% market share, and all the remaining firms have a market share of less than 2% each.
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In perfect competition, each firm:
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produces a standardized product.
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The demand curve for a perfectly competitive firm is:
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perfectly elastic.
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Price-takers are individuals in a market who:
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have no ability to affect the price of a good in a market.
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Marginal revenue:
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equals the market price in perfect competition.
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Marginal revenue is a firm’s:
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increase in total revenue when it sells an additional unit of output.
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If it produces, a perfectly competitive firm will maximize profits at which:
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marginal revenue equals marginal cost.
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Zoe’s Bakery determines that P AVC. Zoe should:
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continue to operate even though she is experiencing an economic loss.
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A perfectly competitive firm is definitely earning an economic profit when:
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P > ATC.
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A perfectly competitive firm operating in the short run producing 100 units of output has ATC = $6 and AFC = $2. The market price is $3 and is equal to MC. In order to maximize profits (or minimize losses), this firm should:
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shut down.
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The short-run supply curve for a perfectly competitive firm is its:
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marginal cost curve above its average variable cost curve.
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A perfectly competitive firm maximizes profit by producing the quantity at which:
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MR = MC
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A perfectly competitive firm will incur an economic loss but will continue producing output in the short run if price is:
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greater than average variable cost but less than average total cost.
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Economic profits in a perfectly competitive industry induce ________, and losses induce ________.
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entry; exit