MCQ Questions from Ch. 6
Select the correct answer from four options for each question.
[The correct answer is in red font]
1. Explicit costs would include:
A. rent.
B. the interest loss of the business owner on money withdrawn from
his/her saving account and invested in the business.
C. the loss of rent on a building the business owner owns and uses in
his/her business.
D. the opportunity costs of the business owner’s time.
2. Implicit costs are best thought of as:
A. variable costs.
B. marginal costs.
C. accounting costs.
D. opportunity costs.
3. Which of the following are implicit costs for a typical firm?
A. Insurance costs.
B. Electricity costs.
C. Opportunity costs of capital owned by the firm.
D. Cost of labour hired by the firm.
4. If a firm has total revenue of $200 million, explicit costs of $190 million and implicit
costs of $10 million, its economic profit is:
A. $200 million.
B. $70 million.
C. $10 million.
D. $0 million.
5. Economic profit is:
A. always zero.
B. always less than accounting profit.
C. always more than accounting profit.
D. accounting profit less implicit costs.
6. Economic profit equals total revenue minus:
A. total explicit costs.
B. implicit costs.
C. total opportunity costs.
D. variable costs.
Select the correct answer from four options for each question.
[The correct answer is in red font]
1. Explicit costs would include:
A. rent.
B. the interest loss of the business owner on money withdrawn from
his/her saving account and invested in the business.
C. the loss of rent on a building the business owner owns and uses in
his/her business.
D. the opportunity costs of the business owner’s time.
2. Implicit costs are best thought of as:
A. variable costs.
B. marginal costs.
C. accounting costs.
D. opportunity costs.
3. Which of the following are implicit costs for a typical firm?
A. Insurance costs.
B. Electricity costs.
C. Opportunity costs of capital owned by the firm.
D. Cost of labour hired by the firm.
4. If a firm has total revenue of $200 million, explicit costs of $190 million and implicit
costs of $10 million, its economic profit is:
A. $200 million.
B. $70 million.
C. $10 million.
D. $0 million.
5. Economic profit is:
A. always zero.
B. always less than accounting profit.
C. always more than accounting profit.
D. accounting profit less implicit costs.
6. Economic profit equals total revenue minus:
A. total explicit costs.
B. implicit costs.
C. total opportunity costs.
D. variable costs.
