Please answer 13-15. A) rent on a building B) the cost of fertilizer for a farme

Question

Please answer 13-15.

A) rent on a building B) the cost of fertilizer for a farmer ) the economic depreciation of capital equipment the business owns E) wages paid to workers 13. Which of the following is true Profit as calculated by accountants and economic profit are not necessarily equal B) ) Profit as calculated by accountants is always smaller than economic profit C) Economic profit ignores implicit costs D) The Internal Revenue Service taxes the firm's economic profit but not its normal profit E) The Internal Revenue Service taxes the firm's normal profit but not its economic profit 14. As output increases, economies of scale occur when the A) long-run average cost increases B) long-run average cost decreases. C) short-run average total cost decreases D) long-run average cost stays constant E) long-run fixed cost decreases. as its si 15. Diseconomies of scale occurs when a firm's average total cost of production plant and its labor force A) decreases; increase by the same percentage B) does not change; increase by the same percentage C) increases; increase by the same percentage D) decreases; do not change E) increases; do not change 16. Each firm in a perfectly competitive industry A) produces a good that is slightly different from that of the other firms. B produces a good that is identical to that of the other firms attains economies of scale so that its efficient size is large compared to the market as a whole. has control over at least one unique resource to separate themselves from their competitors produces a good that is identical to that o . D) E) has an important influence on the market price of the good or service being produced 17. The figure below illustrates a perfectly competitive firm. Curve B represents: AA) MR curve. B) ATC curve MC curve AVC curve. E) AFC curve.

Explanation / Answer

13. Option A

Accounting profit incorporates only the explicit costs in the calculation. Economic profit incorporates both the explicit and the implicit cost in the calculation.

14. Option B

As the output increases, in the stage of economies of scale, the LRAC is on the decreasing portion of the curve. The LRAC has a flatted U shape.

15. Option C

Diseconomies of scale stage is on the upward portion of the LRAC curve. In thisstage, as the output increases, the cost of production also increases because of the increase in plant size and work force.

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