Chapter 9: Businesses and the Costs of Production

Question 1

-Payment that must be made to obtain and retain the services of a resource

Answer 1

Economic costs

Question 2

-The monetary payments it makes to purchase resources from others

Answer 2

Explicit costs

Question 3

-Opportunity costs of using the resources that it already owns rather than selling those resources to outsiders for cash

Answer 3

Implicit Costs

Question 4

-Profit number that accountants calculate by subtracting total explicit costs from total sales revenue

Answer 4

Accounting Profit

Question 5

-Normal amount of accounting profit that you likely would have earned in other ventures

Answer 5

Normal profit

Question 6

-Period too brief for a firm to alter its plant capacity, yet long enough to permit a change in the degree to which the plant’s current capacity is used

Answer 6

Short Run