CA Chapter 13 -01
61) Explicit costs
A) Include only payments to labor.
B) Are the dollar payments made for the use of resources.
C) Include the market value of all resources used to produce a good.
D) Are the total value of resources used to produce a good but for which no monetary payment is
made.
62) Implicit costs
A) Include only payments to labor.
B) Are the sum of actual monetary payments made for resources used to produce a good.
C) Include the value of all resources used to produce a good.
D) Are the value of resources used, for which no monetary payment is made.
63) Economic cost
A) Includes both implicit and explicit costs.
B) Is the sum of actual monetary payments made for resources used to produce a good.
C) Includes only implicit costs.
D) Decreases as the level of production increases.
64) Accounting costs and economic costs differ because
A) Economic costs include implicit costs and accounting costs do not.
B) Accounting costs include implicit costs and economic costs do not.
C) Economic costs include explicit costs and accounting costs do not.
D) Accounting costs include explicit costs and economic costs do not.
65) Which of the following statements about the relationship between economic costs and
accounting costs is true? Cost, not profit
A) Accounting costs are always less than or equal to economic costs.
B) Accounting costs must always equal economic costs.
C) Accounting costs are always greater than economic costs.
D) Accounting costs are equal to or greater than economic costs.
66) Megan used to work at the local pizzeria for $15,000 (implicit cost) per year but quit in order
to start her own deli. To buy the necessary equipment, she withdrew $20,000 from her
inheritance (implicit cost) (which paid 8 percent interest). Last year she paid $25,000 for
ingredients and $500 per month rent (explicit cost) but had revenue of $50,000. She asked her
dad the accountant and her mom the economist to calculate her costs for her.
A) Dad says her cost is $9,000 and Mom says her cost is $2,400.
B) Dad says her cost is $31,000 and Mom says her cost is $35,000.
C) Dad says her cost is $25,000 and Mom says her cost is $16,600.
D) Dad says her cost is $31,000 and Mom says her cost is $47,600.