micro econ lecture 30 – Flashcards
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Profit
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Total revenue - Total cost
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Joy sells 200 glasses of iced tea at $.50 each. Her total costs are $25. Her profits are • A.$25. • B.$75. • C.$100. • D.$175.
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$75
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Explicit
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Precisely and clearly expressed or readily observable, leaving nothing to implication
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Implicit
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Implied though not directly expressed, inherent in the nature of something
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Which of the following is an example of an implicit cost? • A.Wages paid to employees • B.Cost of food delivery • C.The opportunity cost of the owner's time • D.Monthly insurance premiums
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The opportunity cost of the owners time
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Pete owns a shoe-shine business. Which of the following costs would be implicit costs? (i)shoe polish (ii)rent on the shoe stand (iii)wages Pete could earn delivering newspapers (iv)interest that Pete's money was earning before he spent this savings to set up the shoe-shine business • a.(i) and (ii) only • b.(iv) only • c.(iii) and (iv) only • d.(i), (ii), (iii), and (iv)
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C
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• Accounting profit
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total revenue -explicit costs
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Economic profit
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Consider "all cost"=Explicit Costs + Implicit Costs = total revenue -all costs (including explicit and implicit costs)
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Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are • a. $100, and her economic profits are $25. • b.$100, and her economic profits are $75. • c.$25, and her economic profits are $100. • d.$75, and her economic profits are $125.
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A
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marginal product
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of any input is the increase in output arising from an additional unit of that input, holding all other inputs constant
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Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 132). Then the marginal product of the 13th worker is • a.8 units of output. • b.10 units of output. • c.122 units of output. • d.132 units of output.
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10 units of output
