1.Carol starts her own business after quitting a job in which she made $60,000 a year. Expenses include $180,000 for wages and salaries, $12,000 for utilities, $160,000 for materials and supplies, and $5000 for gasoline. She uses her own car in her work, for which she paid $28,000 two years earlier. She could rent the car for $4,932 a year. If revenues the first year are $375,000 what is her accounting and economic profit?

a)$75,000, $47,000

b)$18,000, $-46,932

c)$23,000, $-41,932

d)$5,000, $23,000

2.Jeff starts his own business after quitting a job in which he made $75,000. Expenses include $175,000 for wages and salaries (including a salary of $125,000 for himself), $115,000 for materials and supplies, $20,000 for utilities, and $6000 for gasoline. He uses his own car in his work, for which he paid $45,000 two years earlier. He could rent a similar car for $5000 a year. If his revenues are $350,000, accounting profits and economic profits respectively are

a)$40,000 and $35,000

b)$40,000 and $29,000.

c)$34,000 and $29,000

d)$34,000 and $79,000.

3.Suppose a family-owned yogurt shop has $100,000 in total revenues, $36,000 in rent, and $34,000 in additional operating costs. The husband and wife work in the shop and pay no wages to themselves or other family members who work in the shop. The economic profits from the shop are

a)$30,000

b)Less than $30,000.

c)less than $25,000

d)$25,000

4.Suppose that you open your own business and receive an accounting profit of $30,000 per year. When you started your business, you left a job that paid you a $40,000 salary annually. Also, suppose that you invested $100,000 of your own money to start up your business. If the NROR on capital is 6 percent, your economic profit is

a)-$10,000.

b)$24,000.

c)-$16,000.

d)$6,000.

5.Suppose a perfectly competitive firm faces the following short run cost and revenue conditions: ATC = $6.00; AVC = $4.00; MC = $4.50; MR = $3.50. The firm should

a)shut down.

b)increase output.

c)remain at the same position.

d)increase price.

6.Suppose a perfectly competitive firm faces the following cost and revenue conditions: ATC = $25.00; AVC = $20.00; MC = $23.00; MR = $23.00. The firm should

a)decrease output.

b)increase output.

c)remain in the same position.

d)shut down.

7.Suppose a monopolist costs and revenues are as follows: ATC = $2.00; MC = $2.00; MR = $2.00; P = $2.00. The firm should

a)shut down.

b)not change output or price.

c)decrease output and increase price.

d)Increase output and decrease price.

8.Suppose a monopolist's costs and revenues are: ATC = $6.00; MC = $5.00; MR = $4.00; P = $9.00. The firm should

a)decrease output and increase price.

b)not change output or price.

c)increase output and decrease price.

d)shut down.

9.Suppose a monopolist's costs and revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $44.00. The firm should

a)not change output or price.

b)shut down.

c)increase output and decrease price.

d)decrease output and increase price.

10.Suppose a monopolist's costs and revenues are as follows: ATC = $6.00; MC = $5.00; MR = $4.00; P = $5.00. The firm should

a)not change output or price.

b)decrease output and increase price.

c)shut down.

d)increase output and decrease price.

11.Suppose a monopolist's costs and revenues are as follows: ATC = $6.00; MC = $6.50; MR = $7.00; P = $6.50. The firm should

a)not change output or price.

b)decrease output and increase price.

c)shut down.

d)increase output and decrease price.