Question : 21) Which of the following an implicit cost in Jim’s : 1241186

21) Which of the following is an implicit cost in Jim’s business venture?

i.the salary Jim could have earned at another job

ii.the interest Jim must pay on the loan he incurred to help open his business

iii.the interest Jim lost when he used his savings to help open his business

A) i only

B) ii only

C) iii only

D) i and iii

E) ii and iii

22) Which of the following are correct statements about implicit and explicit costs?

i.Normal profit is an implicit cost.

ii.Economic depreciation is an explicit cost.

iii.Wages are an explicit cost.

A) ii and iii

B) i and iii

C) iii only

D) i, ii, and iii

E) i only

23) The opportunity cost of owning and using a firm’s capital is defined as the capital’s

A) variable cost.

B) fixed cost.

C) economic depreciation.

D) nonpayment depreciation.

E) explicit cost.

24) Economic depreciation is the

A) fall in value of the firm’s capital, calculating using IRS rules.

B) opportunity cost of owning and using the firm’s capital, measured as the change in market value.

C) decrease in the value of finished goods and services that are held in inventories prior to being sold.

D) term given to a fall in a company’s stock price.

E) name given to how accountants calculate the depreciation of the company’s capital.

25) Suppose Billy owns a hair salon in Dallas. He has one large hair dryer for which he paid $1,000. If he can sell the dryer one year later for $800, his total economic depreciation equals

A) $1,000.

B) $200.

C) $800.

D) $1,800.

E) None of the above answers is correct.

26) A firm pays $50,000 for a machine that is used in production for one year, after which it is sold for $40,000 to another firm. The $10,000 difference is

A) an explicit cost of production.

B) economic depreciation, an implicit cost of production.

C) normal profit.

D) not counted as an economic cost of production.

E) not an opportunity cost because it is not actually paid.

27) Interest is considered a(n)

A) explicit cost when the firm pays a bank to borrow money.

B) implicit cost when the firm owner uses his or her own funds to buy capital.

C) return to entrepreneurship if the firm owner uses her own funds to buy capital.

D) form of depreciation if the cost of borrowing increases.

E) Both answers A and B are true.

28) Normal profit is a(n) ________ cost because ________.

A) implicit; it represents the cost of not running another firm

B) explicit; a firm must pay income taxes on its profit

C) implicit; it represents the cost of economic depreciation

D) accounting; wages are considered an explicit cost

E) depreciation; the equipment the firm owns wears out over time

29) In economics, a “normal profit” is the return to

A) labor.

B) capital.

C) land.

D) entrepreneurship.

E) Answers B and D are correct.

30) The return to entrepreneurship is known as

A) economic profit.

B) normal profit.

C) opportunity revenue.

D) normal revenue.

E) explicit profit.