Question : 31) A firm’s total revenue minus its total opportunity cost : 1226162

31) A firm’s total revenue minus its total opportunity cost is called its

A) accounting profit.

B) normal profit.

C) economic profit.

D) abnormal profit.

E) entrepreneur’s profit.

32) Economic profit equals total revenue minus total

A) explicit costs.

B) opportunity costs.

C) implicit costs.

D) accounting costs.

E) entrepreneur’s costs.

33) Which of the following is true?

A) Profit as calculated by accountants and economic profit are not necessarily equal.

B) Profit as calculated by accountants is always smaller than economic profit.

C) Economic profit ignores implicit costs.

D) The Internal Revenue Service taxes the firm’s economic profit but not its normal profit.

E) The Internal Revenue Service taxes the firm’s normal profit but not its economic profit.

34) April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year. She started her own landscaping business. She rents machines and tools for $50,000 and pays $10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000.

A) Her accountant calculates her profit as $40,000.

B) She has an economic loss.

C) Her explicit cost is $105,000.

D) Both answers A and B are correct.

E) Both answers A and C are correct.

35) Jennifer owns a pig farm near Salina, Kansas. Last year she earned $39,000 in total revenue while incurring $38,000 in explicit costs. She could have earned $27,000 as a teacher in Salina. These are all her revenue and costs. Therefore Jennifer earned an

A) accounting profit of $1,000 but incurred an economic loss of $26,000.

B) accounting profit of $1,000 but incurred an economic loss of $65,000.

C) accounting profit of $1,000 but incurred an economic loss of $38,000.

D) economic profit of $1,000.

E) None of the above answers is correct.

36) Suppose a firm’s total revenue is $1,000,000. The firm has incurred explicit costs of $750,000. There is also $50,000 of forgone wages by the owner, $10,000 of forgone interest by the owner, $3,000 worth of economic depreciation, and $20,000 worth of normal profit. What is the firm’s economic profit?

A) $250,000

B) $200,000

C) $190,000

D) $167,000

E) $180,000

37) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager’s salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000.

A) His accounting profit is $350,000.

B) His economic profit is $150,000.

C) His economic profit is zero.

D) His accounting profit is zero.

E) None of the above answers are correct.

38) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager’s salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000.

A) His explicit costs are $330,000.

B) His implicit costs are $170,000.

C) His economic profit is zero.

D) Only answers A and C are correct.

E) Answers A, B, and C are correct.

39) Suppose that a firm earned $500,000 in total revenue. At the same time, it incurred labor costs of $200,000; economic depreciation of $50,000; normal profit of $75,000; interest paid to the bank of $25,000; and used other factors of production that cost $100,000. The economic profit earned by the firm equals

A) $275,000.

B) $175,000.

C) $50,000.

D) $200,000.

E) $500,000.

40) Bill is an economics professor who earns $40,000 teaching but decides to leave and fulfill his dream of catering barbecues. During his first year of barbecuing he earned total revenue of $60,000. He spent $30,000 on food and supplies. He also paid his wife $10,000 to help serve food. The normal profit for an entrepreneur running a barbecue business is $3,000. He also rented an industrial grill/fry truck for $12,000. An accountant would conclude that Bill’s profit was

A) $30,000.

B) $20,000.

C) $8,000.

D) -$2,000.

E) $40,000.