Multiple Choice Questions
1.Which of the following is true?
a. Economists calculate only economic profit, and accountants calculate only accounting profit.
b. Economic profit is always greater than accounting profit.
c. Accounting profit is the difference between total revenue and explicit costs.
d. Economic profit is the difference between total revenue and implicit costs.
2.The perfectly competitive firm maximizes profit at the output where
a. price equals marginal cost.
b. marginal revenue equals marginal cost.
c. average variable cost equals average fixed cost.
d. a and b
e. all of the above
3.Which of the following is true of a monopolist's demand curve?
a. It is perfectly elastic.
b. It is perfectly inelastic.
c. It indicates that the monopolist will be able to sell more units at a higher price.
d. It is identical with the industry demand curve for the product.