1. Accounting profit is equal to the firm's total revenue less its (explicit or implicit) costs.

2. Normal profit is an implicit cost and is the minimum payment that entrepreneurs must receive for performing the entrepreneurial functions for the firm. Economic profit is equal to the firm's total (costs or revenues) minus its economic (costs or revenues) .

1.5 points

QUESTION 5

1. In the short-run the firm can change its output only by changing the quantity of the (fixed or variable) resources it employs.

   In the short run a firm is unable to change the quantity of its (fixed or variable) resources.

   A firm's overall plant capacity is considered fixed in the (long or short) run and variable in the (long or short) run.

2 points

QUESTION 6

1. Would the following be considered a long-run, or short-run adjustment to production?

   - A. B.	Wendy's builds a new restaurant
   - A. B.	General Motors hires 10 auto assembly workers
   - A. B.	A farmer increases the amount of fertilizer used on his corn crop
   - A. B.	Rush University adds a cancer patient wing to its hospital.

   A.	Long-Run
   B.	Short-Run