Question

11. The wages a firm pays its workers are an implicit opportunity cost of running the business.

True

False

12. If a firm is economically efficient, it must be technologically efficient.

True

False

13. Sheila's Sports Shop is a very popular sporting goods store, which has a yearly revenue of $600,000. Sheila runs the business herself. Her alternative employment options are to be a college swimming coach for $50,000 per year or a construction worker for $40,000 per year. Sheila spends $230,000 purchasing goods for resale to her customers. She also has four employees, who each earn $25,000 per year. Sheila owns the building that her Sports Shop is housed in she remodeled a house that she owns and that she could have rented out for $20,000 per year instead. Sheila's implicit costs equal

		$90,000 per year.
		$330,000 per year.
		$110,000 per year.
		$70,000 per year.

14. Emma owns a firm that produces umbrellas. Currently, Emma produces 2,500 umbrellas a day. Emma cannot produce more umbrellas in a day unless she purchases another machine or else hires more workers. Emma is ________ efficient.

		economically
		technologically
		capital and labor
		cost

15. Giving managers an ownership stake in a company is an example of

		a command system.
		economies of scope.
		a system that encourages managers to become agents that monitor their principals.
		an incentive system.

Answer 1

1) :- it is false

Because wages are explicit costt

2) :- it is false

Because economic efficient point occure where

Willingness to pay= marginal cost while

Technological efficient point occure where average cost is minimised

3) :- implicit cost= rent pric+ swimming coach fees

= 20000+ 50000

= 70000

D is right option

4) :- B is right option

Technologically efficient.

5):-D is right option

Giving managers an ownership stake in a company is an example of

an incentive system

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