Question 1 : Accounting profit is defined as
total sales - (explicit costs + implicit costs).
total sales - explicit costs - implicit costs.
total opportunity costs.
total monetary costs.
total implicit costs.

Question 2 : A firm that owns a car rental agency, a modeling agency, a French bakery, and a pet store is
a conglomerate.
a perfect competitor.
inefficient.
vertically integrated.
horizontally integrated.

Question 3 : Nonprofit firms, both private and governmental, may differ in behavior from profit-seeking private firms because
private firms do not compete with government firms.
government firms are more difficult to manage.
government managers seek more capital-intensive means of production.
the demand for the products is inherently different.
there is no residual claimant.

Question 4 : What is one thing that entrepreneurs do NOT do?
They identify consumer demands.
They establish supply and demand.
They organize production.
They allocate resources.
They acquire assets.

Question 5 : The short-run marginal cost curve falls and then rises because of
fixed costs.
diseconomies of scale.
diseconomies and economies of scale.
the principle of diminishing returns.

Question 6 : Ralph's Travel Agency had accounting profits of $50,000 and implicit costs of $30,000. What were economic profits?
$50,000
$30,000
$20,000
The amount cannot be determined from the information given.

Question 7 : Average fixed cost plus average variable cost equals
marginal cost.
total cost.
average total cost.
total variable cost.
marginal fixed cost.

Question 8 : An example of a horizontally integrated firm is one that
uses highly automated assembly line techniques.
owns several plants in the same state.
owns several plants, each manufacturing the same product.
produces a variety of goods and sells them in widely disparate markets.
owns several plants, each handling a different stage of production.

Question 9 : Firms exist for all but which one of the following reasons?
To reduce transactions costs
To produce things
To organize teams
To monitor shirking
To reduce the costs of buying

Question 10 : A firm that owns a wheat farm, a grain elevator, a flour mill, a commercial bakery, and a grocery store chain is
a conglomerate.
an imperfect competitor.
a monopoly.
vertically integrated.
horizontally integrated.