Microeconomics Name: PRACTICE QUESTIONS FOR THE CHAPTER ON PRODUCTION AND COSTS 1) Suppose that a business incurred implicit costs of $150,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were: A) $100,000 and its economic profits were zero. B) $200,000 and its economic profits were zero. C) $100,000 and its economic profits were $100,000. D) zero and its economic loss was $200,000. E) None of the above. 2) Here is some information that relates to a business David Simon opened a year ago: price = $4; quantity sold = 10,000; implicit cost = $4,000; explicit cost = $8,000. What did economic profits equal for the year? A) $28,000 B) $32,000 C) $6,000 $24,000 3) Assume that in the short run a firm is producing 50 units of output, has average total costs of $100, and average variable costs of $75. The firm's total fixed costs are: A) $5,000. B) $1,250. C) $750. D) $25. E) None of the above. 4) Q = 100 units, AVC = $175, and FC = $6,000. What is MC? A) $100 B) $600 C) $400 D there is not enough information to answer the question 5) Q= 100 units, TC = $10,000 and FC = $6,000. What is A VC? $1,000 $4,000 C) $400 D) $6,000 none of the above 6) Here is some information that relates to a business David Simon opened a year ago: price = $2.50; quantity sold = 2,856; AVC = $.25; ATC = $2. What did profits equal for the year? A $9,640 $1,428 $964 $1,928 none of the above 7) Here is some information that relates to a business David Simon opened two years ago: price = $6; quantity sold = 15,233; FC = $24,000; AVC = $2. What did profits equal for the year? A $36,932 B) $23, 165 $47,065 $52, 165 none of the above