Question

Exam 2 (Chapters 5, Dayanna La roeconomics - Spring20 SPEARS > Activities and Due Dates > Exam 2 (Chapters 5, 6, 7) Et All Questions Completed 9 out of 20 0 00 45 - Resources Save A 18 of 20 > 1. Economists assume that only corporations seek to maximize their profits. 2. Normal profits are profits that are in excess of implicit and explicit costs. 3. "Normal profit" and "zero economic profit" refer to the same concept. 4. A partnership has most of the legal rights of individuals and can issue shares of stock to raise financial capital. Answer Bank false true 5. Am entrepreneur who works for free during the early start-up phases of a firm should not count forgone salary as an economic, or implicit, cost. 6. Firms located in an area with access to lots of low-cost labor tend to use low-technology, labor-intensive production processes. 7. The percentage of Europeans who classify themselves as entrepreneurs is approximately half the percentage in the United States. About us Careers privacy policy Terms of use contact us help

Answer 1

1. False. Economists does not assume that only corporation seek to maximize profits as everyone including partnership, individuals all are working towards one goal ie seeking to maximize their profits.

2. False. Profits that are in excess of implicit and explicit costs are economic profits not normal profit.

3. True. Normal profit are also called the zero economic profits as they both refer to the situation when total cost is equal to the total revenue.

4. False. Partnership cannot issue shares of stocks to raise financial capital. The can issue partnership interests which are similar to shares but noy shares.

5. False. An entrepreneur should count the forgone salary as implicit or opportunity cost as he himslef works rather than hiring someone else to do thr work and therefore saves the cost of salary.

6. True. A firm which is located in an area where there is cheap labour availability will go for labour intensive techniques rather than machines to lower their costs.

7. True. In reality the percentage of European who classify themselves as entrepreneurs are half that in the US.

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