Study Guides (400,000)
CA (160,000)
Western (10,000)
ECON (700)
Final

Economics 1021A/B Study Guide - Final Guide: Economic Efficiency, Sasktel, Savings Account


Department
Economics
Course Code
ECON 1021A/B
Professor
Jeannie Gillmore
Study Guide
Final

This preview shows pages 1-3. to view the full 30 pages of the document.
Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 10 Organizing Production
10.1 The Firm and Its Economic Problem
1) A firm's goal is to
A) maximize revenue.
B) maximize cost while minimizing revenue.
C) maximize profit.
D) minimize costs.
E) minimize risk.
Answer: C
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
2) A firm's total opportunity cost of production is the sum of the cost of using resources
A) bought in the market.
B) owned by the firm.
C) supplied by the firm's owner.
D) bought in the market and supplied by the firm's owner.
E) bought in the market, owned by the firm, and supplied by the firm's owner.
Answer: E
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
3) The implicit rental rate
A) is the firm's opportunity cost of using the capital it owns.
B) is paid with cash.
C) has two components: economic depreciation and foregone interest.
D) both A and C are correct.
E) both B and C are correct.
Answer: D
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
4) Which one of the following is included in the implicit rental rate of capital?
A) economic depreciation
B) the cost of electricity
C) the cost of raw materials
D) the cost of low-skilled labour
E) the cost of heating
Answer: A
Diff: 2 Type: MC
Topic: The Firm and Its Economic Problem
Copyright © 2013 Pearson Canada Inc. 169
find more resources at oneclass.com
find more resources at oneclass.com

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Parkin/Bade, Economics: Canada in the Global Environment, 8e
5) Which one of the following statements about the implicit rental rate of capital is true?
A) It is the market value of capital.
B) It is the opportunity cost to a firm of using its own capital.
C) It includes normal profit.
D) It is the amount paid for the use of land or buildings.
E) It is the depreciated value of capital.
Answer: B
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
6) The difference in the market value of a new car and the market value of the same car one year
later is
A) economic depreciation.
B) physical depreciation.
C) economic deterioration.
D) physical deterioration.
E) conventional depreciation.
Answer: A
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
7) Economic depreciation is
A) the same as depreciation calculated by an accountant.
B) equal to economic profit minus normal profit.
C) the change in the market value of capital over a given period.
D) the deterioration of the physical appearance of a capital.
E) paid in cash.
Answer: C
Diff: 1 Type: MC
Topic: The Firm and Its Economic Problem
8) Marc bought a new car last year for $10,000. He can now sell the car for $8,500. To buy this
year's model of the same car he would have to pay $11,000. What is the one-year amount of
economic depreciation?
A) $2,500
B) $1,500
C) $1,000
D) $10,000
E) $3,500
Answer: B
Diff: 2 Type: MC
Topic: The Firm and Its Economic Problem
Copyright © 2013 Pearson Canada Inc. 170
find more resources at oneclass.com
find more resources at oneclass.com

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Parkin/Bade, Economics: Canada in the Global Environment, 8e
9) Marc bought a new car last year for $10,000. He can now sell the car for $8,500. To buy this
year's model of the same car he would have to pay $11,000. What is the implicit rental rate using
the car for one year at a zero percent interest rate?
A) $2,500
B) $3,500
C) $1,000
D) $10,000
E) $1,500
Answer: E
Diff: 2 Type: MC
Topic: The Firm and Its Economic Problem
10) Marc bought a new car last year for $10,000. He can now sell the car for $8,500. To buy this
year's model he would have to pay $11,000. Marc also had to take out a $9,000 loan to buy the
car, which had to be paid back in yearly installments of $3,300 per year over three years. What is
the implicit rental rate of the first year's use of the car?
A) $2,800
B) $1,300
C) $1,800
D) $13,300
E) $4,800
Answer: C
Diff: 3 Type: MC
Topic: The Firm and Its Economic Problem
11) The implicit rental rate to a firm of owning a building is
A) the sum of economic depreciation and foregone interest.
B) economic depreciation only.
C) foregone interest only.
D) the cost of using an alternative building.
E) the rent paid on the building.
Answer: A
Diff: 2 Type: MC
Topic: The Firm and Its Economic Problem
12) Gerald is a freelance writer who could work for a newspaper at $25,000 a year but instead
runs his own business making revenue of $40,000 a year. His only business expenses are $1,000
for writing materials and $12,000 for rent. What is Gerald's economic profit from working as a
freelance writer?
A) $2,000
B) $28,000
C) $15,000
D) $25,000
E) $27,000
Answer: A
Diff: 2 Type: MC
Topic: The Firm and Its Economic Problem
Copyright © 2013 Pearson Canada Inc. 171
find more resources at oneclass.com
find more resources at oneclass.com
You're Reading a Preview

Unlock to view full version