Q: Which of the following equations correctly represents economic profit?

$$\text{Economic Profit} = \text{Total Revenue} - (\text{Explicit Costs} + \text{Implicit Costs})$$

Question 1

Which of the following best describes the concept of opportunity cost in economics?

Accepted Answer

The value of the next best alternative foregone when making a decision.

Question 2

Which of the following is NOT considered a factor of production?

Accepted Answer

Money

Question 3

In a command economy, who primarily decides what to produce and at what price?

Accepted Answer

Government authorities

Question 4

Suppose a business is considering two options: Option A yields a total revenue of $$\10$$,000$$, economic profit of $$\$$2,000$$, and Option B yields a total revenue of $$\8$$,000$$, economic profit of $$\$$1,500. $$What is the opportunity cost of choosing Option A over Option B?

Accepted Answer

$$\1$$,500$

Question 5

Which of the following would cause a demand curve to shift to the right?

Accepted Answer

An increase in consumer income

Question 6

If the price of input resources increases, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left

Question 7

Which of the following best describes a traditional economy?

Accepted Answer

Decisions are based on customs and traditions.

Question 8

A market economy is characterized by which of the following?

Accepted Answer

Individuals and businesses decide what to produce and buy, and prices are set by supply and demand.

Question 9

Which of the following is an example of a capital resource?

Accepted Answer

A factory building

Question 10

If the number of sellers in a market increases, what is the expected effect on the supply curve?

Accepted Answer

The supply curve shifts to the right

Question 11

Which of the following equations correctly represents economic profit?

Accepted Answer

$$	ext{Economic Profit} = 	ext{Total Revenue} - (	ext{Explicit Costs} + 	ext{Implicit Costs})$$

Question 12

Which of the following is most likely to shift the demand curve for smartphones to the left?

Accepted Answer

A decrease in the number of buyers

Question 13

Which of the following is a plausible result of a decrease in input prices for producers?

Accepted Answer

Supply curve shifts to the right

Question 14

Which of the following is NOT a characteristic of a market economy?

Accepted Answer

Government sets production quotas

Question 15

Suppose the demand for a product increases due to a rise in consumer income. What is the expected effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases

Question 16

Which of the following best explains why scarcity exists?

Accepted Answer

Resources are limited and wants are unlimited.

Question 17

If technology improves in the production of electric cars, what is the likely effect on the supply curve?

Accepted Answer

Supply curve shifts to the right

Question 18

Which of the following is an example of entrepreneurship as a factor of production?

Accepted Answer

An individual starting a new business

Question 19

Which of the following would NOT cause a shift in the supply curve?

Accepted Answer

A change in consumer income

Question 20

A decrease in the price of a substitute good will have what effect on the demand for the original good?

Accepted Answer

Demand for the original good decreases

Foundations of Economics: Key Concepts, Decision-Making, and Market Dynamics

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