Question 1(1.25 points)

Suppose Sam's Shoe Co. makes one kind of shoe. An example of a fixed cost for this company would be:

Question 1 options:

	the lease for the factory building.
	the leather needed to make the shoes.
	the needles for the sewing machines that need to be replaced after sewing every 1,000 pairs.
	All of these are examples of fixed costs.

Question 2(1.25 points)

Suppose Sam's Shoe Co. makes one kind of shoe. An example of a variable cost for this company would be:

Question 2 options:

	the design pattern for the shoes. .
	the leather needed to make the shoes.
	the lease to the factory building.
	All of these are examples of variable costs.

Question 3(1.25 points)

Mika borrows $100,000 to start up her own beauty shop. She pays 5 percent interest on her loan. In order to account for all costs of her business, Mika must not forget:

Question 3 options:

	the implicit cost of $100,000.
	the implicit cost of $5,000.
	the explicit cost of $105,000.
	the explicit cost of $5,000.

Question 4(1.25 points)

Mika withdraws $100,000 from her trust fund to start up her own manicure business. The trust fund earns 4 percent interest. In order to properly account for all costs of her business, Mika must not forget:

Question 4 options:

	the implicit cost of $104,000.
	the implicit cost of $4,000.
	the explicit cost of $104,000.
	the explicit cost of $4,000.

Question 5(1.25 points)

Anthony quit his job where he was earning an annual salary of $48,000 to open his own business. Annually, he will pay $18,000 for rent, $120,000 for wages, $36,000 for raw materials. If he receives annual revenue of $230,000, then his accounting profit will be _____ and his economic profit will be _____.

Question 5 options:

	negative; negative
	negative; positive
	positive; negative
	positive; positive

Question 6(1.25 points)

A production function represents:

Question 6 options:

	the relationship between the quantity of inputs and the quantity of outputs.
	the relative values of the inputs and modes of production.
	the relative costs of the inputs across various modes of production.
	the relationship between the cost of the inputs and the revenue generated by the outputs.

Question 7(1.25 points)

As a firm increases production, total cost _____.

Question 7 options:

	will stay the same
	will decrease
	will increase
	may either increase or decrease

Question 8(1.25 points)

As a firm increases production, average total cost _____.

Question 8 options:

	will stay the same
	will decrease
	will increase
	may either increase or decrease

Question 9(1.25 points)