1. A profit-maximizing firm hires labor up to the point where

A. Price of the product equals the value of marginal product.

B. Price of the product equals the wage rate.

C. The wage rate multiplied by the quantity of labor equals the marginal product.

D. The wage rate equals the value of marginal product.

E. Marginal revenue equals the wage rate.

2. Which of the following is NOT a factor of production?

A. Labor

B. Capital

C. Entrepreneurship

D. Bonds

E. Land

3. Normal profit is a(n) ________ cost because ________.

A. Implicit; it represents the cost of not running another firm

B. Explicit; a firm must pay income taxes on its profit

C. Implicit; it represents the cost of economic depreciation

D. Accounting; wages are considered an explicit cost

E. Depreciation; the equipment the firm owns wears out over time

4. Accountants calculate

A. Economic depreciation as part of the firm's cost.

B. Depreciation using Internal Revenue Service rules.

C. The opportunity cost of all the resources the firm uses.

D. All the firm's implicit costs but only a few of its explicit costs.

E. All of the above answers are correct.