Question 1

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is
A)$8,000.
B)$12,000.
C)$20,000.
D)$32,000.

Accepted Answer

Bubba's annual total revenue can be calculated by multiplying the amount of shrimp he catches by the price he sells it for, so:

Annual total revenue = 4,000 pounds x $5/pound = $20,000

This is greater than his total cost of catching shrimp, which is $3/pound x 4,000 pounds = $12,000. Therefore, Bubba's best choice is to sell the shrimp and earn an annual total revenue of $20,000.

Question 2

Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average cost of production per rug is $50. She sells each rug for a price of $65. Tsintah's total revenues are
A)$750.
B)$2,500.
C)$3,250.
D)$5,750.

Accepted Answer

Tsintah's total revenues can be calculated as the price per rug times the number of rugs sold, which is $65 x 50 = $3,250.

Question 3

Economists assume that the goal of the firm is to maximize total
A)revenue.
B)profits.
C)costs.
D)satisfaction.

Accepted Answer

The goal of the firm is to maximize profits, which is equal to total revenue minus total cost. While satisfaction may be a goal for the firm, it is not the primary economic goal.

Question 4

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?
A)The cost of something is what you give up to get it.
B)A country's standard of living depends on its ability to produce goods and services.
C)Prices rise when the government prints too much money.
D)Governments can sometimes improve market outcomes.

Accepted Answer

The cost principle is likely to be most important to a firm's profit-maximizing decision as it involves weighing the costs and benefits of various production options in order to make the most efficient and effective decision. This principle relates to the concept of opportunity cost, which involves giving up one option in favor of another and considering the potential benefits and drawbacks of each.

Question 5

Total revenue equals
A)marginal revenue - marginal cost.
B)price/quantity.
C)price x quantity.
D)output - input.

Accepted Answer

Total revenue is calculated by multiplying the price of a good or service by the quantity sold. Therefore, the correct choice is C, price x quantity.

Question 6

Economists normally assume that the goal of a firm is to
A)maximize its total revenue.
B)maximize its profit.
C)minimize its explicit costs.
D)minimize its total cost.

Accepted Answer

Maximizing profit is a common assumption in economics as it takes into account both revenue and costs. While a firm may aim to maximize revenue or minimize costs, the ultimate goal is to generate the highest profit possible.

Question 7

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are
A)$7,500.
B)$25,000.
C)$32,500.
D)$67,500.

Accepted Answer

Total revenue = 500 x $65 = $32,500
Total cost of production = 500 x $50 = $25,000
Profit = Total revenue - Total cost of production = $32,500 - $25,000 = $7,500.

Question 8

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's
A)accounting profit was $9 million.
B)economic profit was $9 million.
C)total revenue was $9 million.
D)explicit costs were $9 million.

Accepted Answer

Total revenue is the total amount earned from sales, so in this case it would be 3 million (tubs sold) multiplied by $3 (price per tub), which equals $9 million. Accounting profit would take into account explicit costs (such as the cost of ingredients, labor, and other expenses) to calculate total revenue minus expenses, but we don't have enough information to calculate that. Economic profit would take into account both explicit and implicit costs (such as the opportunity cost of not using resources for other endeavors), but again, we don't have enough information to calculate that.

Question 9

If Danielle sells 300 wrist bands for $0.50 each, her total revenues are
A)$150.
B)$299.50.
C)$300.
D)$600.

Accepted Answer

The answer of If Danielle sells 300 wrist bands for...

Question 10

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are
A)$100.
B)$199.50.
C)$200.
D)$400.

Accepted Answer

The answer of If Kevin's children run a lemonade stand...

Question 11

Total revenue equals
A)price x quantity.
B)price/quantity.
C)(price x quantity) - total cost.
D)output - input.

Accepted Answer

Total revenue is calculated by multiplying the quantity of goods sold by the price at which they are sold. Therefore, the correct choice is A) price x quantity.

Question 12

The amount of money that a firm receives from the sale of its output is called
A)total gross profit.
B)total net profit.
C)total revenue.
D)net revenue.

Accepted Answer

Total revenue is the amount of money a firm receives from the sale of its output. It is calculated by multiplying the price of each unit by the quantity sold. Total gross profit is the total revenue minus the cost of goods sold, while net profit is the total revenue minus all expenses. Net revenue is a term used to refer to revenue after deductions, such as discounts and returns, have been taken into account.

Question 13

An entrepreneur's motivation to start a business arises from
A)an innate love for the type of business that he or she starts.
B)a desire to earn a profit.
C)an altruistic desire to provide the world with a good product.
D)All of the above could be correct.

Accepted Answer

An entrepreneur's motivation to start a business can come from any or all of the above options. A love for the type of business can drive someone to create a company to pursue their passion. A desire to earn a profit is a common reason for starting a business as it can enable financial freedom and independence. An altruistic desire to provide the world with a good product can also propel someone to create a business, with the goal of bettering society or filling a need in the market.

Question 14

Economists normally assume that the goal of a firm is to
(i)earn profits as large as possible, even if it means reducing output.
(ii)earn revenues as large as possible, even if it means reducing profits.
(iii)minimize costs, regardless of profits.
A)(i) only
B)(i) and (ii) only
C)(ii) and (iii) only
D)(i), (ii), and (iii)

Accepted Answer

Economists typically assume that the primary goal of a firm is to maximize profits, which aligns with choice (i) only.

Question 15

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's
A)total revenue was $3.5 million.
B)economic profit was $3.5 million.
C)accounting profit was $3.5 million.
D)explicit costs were $3.5 million.

Accepted Answer

Total revenue is calculated as the quantity sold multiplied by the price per unit, which comes out to be $3.5 million ($7 x 500,000). This means that the dairy generated $3.5 million in revenue from selling organic milk last year.

Question 16

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be
A)$1,000 if she sells 100 candles.
B)$500 if she sells 25 candles.
C)$20 regardless of how many candles she sells.
D)$200 if she sells 5 candles.

Accepted Answer

The answer of Carol Anne makes candles. If she charges...

Question 17

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are
A)$7,500.
B)$25,000.
C)$32,500.
D)$67,500.

Accepted Answer

The answer of Trevor's Tire Company produced and sold 500...

Question 18

Which of the following can be added to profit to obtain total revenue?
A)net profit
B)capital profit
C)operational profit
D)total cost

Accepted Answer

The answer of Which of the following can be added...

Question 19

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are
A)$7,500.
B)$25,000.
C)$32,500.
D)$67,500.

Accepted Answer

The answer of The Three Amigo's company produced and sold...

Question 20

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's
A)accounting profit was $20 million.
B)economic profit was $20 million.
C)total revenue was $20 million.
D)explicit costs was $20 million.

Accepted Answer

Total revenue is the amount of money received from selling a product. In this case, Stick Storage sold 2 million flash drives at a price of $10 each, resulting in a total revenue of $20 million. Accounting profit also takes into account explicit costs, while economic profit takes into account both explicit and implicit costs. The information provided does not allow us to calculate explicit or implicit costs, so we cannot determine accounting or economic profit.

Quiz 13: The Costs of Production

Bubba is a shrimp fisherman who catches 4,000 pounds of shrimp per year. He can sell the shrimp for $5 per pound. His average total cost of catching shrimp is $3 per pound. Bubba's annual total revenue is

Tsintah weaves traditional Navaho rugs. She weaves and sells 50 rugs. Her average cost of production per rug is $50. She sells each rug for a price of $65. Tsintah's total revenues are

Economists assume that the goal of the firm is to maximize total

When a firm is making a profit-maximizing production decision, which of the following principles of economics is likely to be most important to the firm's decision?

Total revenue equals

Economists normally assume that the goal of a firm is to

The Carolina Christmas Tree Corporation grows and sells 500 Christmas trees. The average cost of production per tree is $50. Each tree sells for a price of $65. The Carolina Christmas Tree Corporation's total revenues are

Shelley's Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last year, the firm's

If Danielle sells 300 wrist bands for $0.50 each, her total revenues are

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Total revenue equals

The amount of money that a firm receives from the sale of its output is called

An entrepreneur's motivation to start a business arises from

Economists normally assume that the goal of a firm is to (i) earn profits as large as possible, even if it means reducing output. (ii) earn revenues as large as possible, even if it means reducing profits. (iii) minimize costs, regardless of profits.

A dairy produces and sells organic milk. Last year it sold 500,000 gallons of milk at a price of $7 per gallon. For last year, the firm's

Carol Anne makes candles. If she charges $20 for each candle, her total revenue will be

Trevor's Tire Company produced and sold 500 tires. The average cost of production per tire was $50. Each tire sold for a price of $65. Trevor's Tire Company's total profits are

Which of the following can be added to profit to obtain total revenue?

The Three Amigo's company produced and sold 500 dog beds. The average cost of production per dog bed was $50. Each dog be sold for a price of $65. The Three Amigo's total costs are

Stick Storage manufactures and sells computer flash drives. Last year it sold 2 million flash drives at a price of $10 each. For last year, the firm's