Question

2. Economies of scale refers to when:

Multiple Choice None are correct. o average total cost does not depend on the quantity of output in the long run. o o an increase in the quantity of output decreases average total cost in the long run. an increase in the quantity of output increases average total cost in the long run.

6. Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What costs would be considered when calculating economic profit?

Multiple Choice

7. Suppose Winston's annual salary as an accountant is $60,000, and his financial assets generate $4,000 per year in interest. One day, after deciding to be his own boss, he quits his job and uses his financial assets to establish a consulting business, which he runs out of his home. To run the business, he outlays $8,000 in cash to cover all the costs involved with running the business, and earns revenues of $150,000. What are Winston's accounting profits?

10. When accounting profits are negative, economic profits could be:

Answer 1

2.

Third option is correct answer ie. an increase in quantity of output decreases total avg cost

6.

First option is correct ie. an opportunity cost of his job and interest forgone of 64000 and explicit cost of 8000

7.

Accounting profit = revenue - explicit cost = 150000 - 8000 = 142000

Last option is correct

10.

Economic profit = Accounting profit - implicit cost

When accounting profit is negative, economic profit will be negative

Second option is correct