10. Dr. Faye Sliftrecently began running a plastic surgery clinic. Last month she took in $60,000 in revenue and paid $40,000 in explicit/accounting costs. Did Dr. Slift make an economic profit (as opposed to an accounting profit) last month?

A. Definitely yes. Dr. Slift's economic profit equaled $20,000.

B. Definitely not.

C. Yes. If Dr. Slift also considers her implicit costs, it is clear that her economic profit will exceed $20,000.

D. There isn't enough information to determine is she made a positive economic profit last month.

11. Jack Pott runs the Odds R Not in Your Favor casino. His weekly total revenue equals $50,000. His weekly total economic cost of running the company equals $60,000, consisting of $40,000 of variable costs and $20,000 of fixed costs. An economist would likely advise Mr. Pott in the short run to:

A. keep the business open for a while longer because his revenues are greater than his fixed costs.

B. keep the business open for a while longer because his revenues are covering all of his variable costs and some of his fixed costs.

C. keep the business open because it is generating an economic profit.

D. shut down as quickly as possible in order to minimize his losses.

12. If a firm is producing a quantity of output such thatMarginal Revenue is greater than Marginal Cost (i.e. MR > MC), then the firm's profit:

A. is maximized

B. can be increased by increasing production

C. can be increased by decreasing production

D. can't be improved upon - no way, no how!!!!

13. A firm with an economic profit (P ) of $0 should:

A. produce where MR=MC

B. shut down in the Short Run in order to only lose their Total Fixed Costs

C. produce output below the level where MR=MC in order to cut their costs of production

D. shut down in the Long Run but might choose to produce in the Short Run