1. Maximizing profits means to ______. a. create a balance between seeking economic profits and seeking accounting profits b. reinvest accounting profits in an effort to increase production outputs in the long run c. increase the difference between what is given up for inputs and what is received for outputs d. operate in an output range in which the firm experiences constant returns to scale
1. Maximizing profits means to ______.
a. create a balance between seeking economic profits and seeking accounting profits
b. reinvest accounting profits in an effort to increase production outputs in the long run
c. increase the difference between what is given up for inputs and what is received for outputs
d. operate in an output range in which the firm experiences constant returns to scale
2. A firm’s profits are calculated as the difference between ______.
a. all the money received for its products and all that was spent to produce them
b. the cost of producing the firm’s last unit and the firm’s average per-unit cost
c. the cost of production in the short run and the cost of production in the long run
d. the maximum market price accepted for the firm’s product and the cost to produce it
3. What is the term used to describe total revenues minus total explicit costs?
a. marginal benefits
b. economic profits
c. accounting profits
d. marginal costs
4. Which of the following must be included in an organization’s statement of accounting profits for the statement to be of use?
a. the estimated amount the organization could have earned pursuing other options
b. the extent to which technological improvements increased productivity
c. the percentages planned for reinvestment or distribution to investors
d. the period in which the profit was earned, such as a year or a quarter
5. Reese has recently left her teaching job to open a bakery. The ______ is an example of the implicit costs of her bakery business.
a. rent she pays for the commercial space
b. teaching salary she gave up to start her bakery
c. monthly payments she makes for bakery equipment
d. wages she pays her counter assistant
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