1) After deducting all variable costs, Jordan makes $150 selling wooden birdhouses that he built

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1) After deducting all variable costs, Jordan makes $150 selling wooden birdhouses that he built. If Jordan took off a day of work at a carwash where he would have earned $80 to attend the trade fair where he sold the birdhouses, which of the following statements is true?

ANSWER CHOICES:

A) Jordan has an accounting profit of $70.

B) Jordan has an economic profit of $70.

C)Jordan has an economic profit of $120.

D) Jordan has an accounting profit of $80.

E) Jordan has an economic profit of −$80

2) Which of the following incentives is most important to a business according to the theory of the firm?

ANSWER CHOICES:

A) Low average total cost

B)Low marginal cost

C) High total revenue

D) High accounting profit

E) High economic profit

3) In the long run, a business's total cost is $200, its total revenue is $200, and it is enjoying increasing returns to scale. Which of the following statements is true?

ANSWER CHOICES:

A) The business is earning normal profit.

B) The business is earning negative profit.

C) The business will see lower returns by increasing production.

D)The marginal product is decreasing.

E)The business operates in a market with a low concentration of firms.

4) Which of the following could explain why a firm would decrease production of a good despite making significant accounting profit?

ANSWER CHOICES:

A) The marginal cost equals the marginal benefit.

B) The opportunity cost of an alternative foregone is greater.

C) The economic profit is more than the accounting profit.

D) The economic profit is less than the accounting profit.

E)The fixed costs are unacceptably high.

5) A firm's total revenue is $400, average total cost is $4, and its total variable costs are $240. If it is earning normal profit, what must its fixed costs be?

ANSWER CHOICES:

A) $60

B) $100

C) $156

D) $160

E) $640