Monica quit her $50,000 per year job, purchased a building that was previously rented by the operator of a candy store for $1,500 per month, and used the space to breed and sell tropical fish. In her first year she made a business profit of $60,000. What was her economic profit?

	A.	$10,000
	B.	She had an economic loss of $8,000.
	C.	$42,000
	D.	Her economic profit was the same as her business profit.

The economic term for the costs associated with negotiating and enforcing a contract is

	A.	transaction costs.
	B.	real costs.
	C.	functional costs.
	D.	opportunity costs.

The modern theory of the firm holds that firms behave in a way that is designed to maximize

	A.	monopoly power.
	B.	profit.
	C.	total revenue.
	D.	the value of the firm.

Which theory of profit holds that profit will be higher in industries where firms in the industry are able to prevent other firms from entering the industry?

	A.	Frictional theory
	B.	Managerial efficiency theory
	C.	Monopoly theory
	D.	Risk-bearing theory

The management of firm A observed that every time there is an increase in the price charged by firm B, the level of sales of firm A declines. But when firm C increases its price, the level of sales of firm A increases. From this we can conclude that

	A.	firms A and B produce substitutes in consumption.
	B.	firms A and C produce substitutes in consumption.
	C.	firms A and B produce unrelated in consumption products.
	D.	firms A and C produce unrelated in consumption products.
	E.	None of the above is correct.

If we observe a rise in the equilibrium price and a decline in the equilibrium quantity, then which of the following must have happened?

	A.	Both demand and the supply must have increased.
	B.	Both demand and the supply must have decreased.
	C.	The demand increased while the supply remained unchanged.
	D.	The supply increased while the demand remained the same.
	E.	None of the above is correct.

Which of the following will not be a consequence of an import tariff?

	A.	An increase in the price of the product in the domestic market
	B.	Reduced competitive pressure by foreign firms on the domestic producers
	C.	Increased level of supply in the domestic market
	D.	None of the above is correct.

Use the information about marginal revenue ( MR) that is presented in the table below to determine the level of output that maximizes total revenue.

Output	1	2	3	4	5	6	7	8	9
MR	50	40	30	20	10	0	-10	-20	-30

	A.	There is not enough information to determine the answer.
	B.	9
	C.	6
	D.