Bill has $10 to spend on a Superman, Batman, or an X-Men T-shirt. Bill buys the Superman T-shirt and the Batman shirt was a close second choice. What is the opportunity cost?
A. The amount he spent, $10.
B. Nothing, since he got his preferred choice.
C. The Batman T-shirt.
D. The X-Men T-shirt.
Answer: C
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Accounting profit is the sum of a firm's revenue and its opportunity costs
Indicate whether the statement is true or false
Nancy owns and operates a drug store that generates total revenues worth $30 million in a particular year. Her accounting costs for the year are $25 million. She could have earned $3 million in this year, if she had worked as a consultant for a pharmaceutical firm. Further, she could have earned 5 percent interest on $40 million of her own money that she invests in the business this year. Nancy's
accounting profit in this year is _____ and her economic profit is _____. a. $5 million; zero b. $5 million; $3 million c. $5 million; $8 million d. zero; $3 million e. $3 million; $43 million
The price of a depletable natural resource last year rose more than expected. The most likely explanation is that
a. interest rates fell. b. an unexpected discovery of reserves was made. c. the major suppliers formed a cartel. d. price ceilings were established.
If a currency increases in value in response to market forces, this process is known as
a. reflation. b. revaluation. c. appreciation. d. value-added.