Question

53. When the Keep On Calling Cell Phone Company is at full capacity. It incur $230,000. During the December shutdown period, when no cell phones are produced, $230.000 pany is at full capacity. it incurs costs of incurs costs of $76,000. One can conclude that: A) fixed costs are $230,000. B) at full capacity, variable costs are $154.000. C) fixed costs are $154,000. D) variable costs at half capacity are $115,000. 54. Ownership in corporations is issued in the form of A) partnership agreements. B) loan documents. C) bonds. D) shares of stock. 55. Which of the following is NOT considered an explicit cost? A) electricity B) depreciation on equipment C) building insurance D) rent 56. Arlene makes earrings in the shape of the mascot of a local university. Last year Arlene made 250 pairs of earrings, which she sold to the university bookstore for $10 each. Arlene works out of her home, so her only cost is $3 per pair for materials and 585 for tax help. If Arlene didn't produce earrings, she would spend her time babysitting her nephews and make about $500 per year. Which of the following is TRUE? A) Arlene's economic profit is $1,665. B) Arlene's total revenue is $2,500. C) Arlene's total implicit costs are $835. D) Arlene's accounting profit is $1,165

Answer 1

53) VC = TC-FC = 230000-76000 = 154000

Option(B)

54) shares of stock

option(D)

55) depreciation on equipment

option(B)

56) TR = 250*10 = 2500

Explicit costs = 3*250 + 85 = 835

Implicit costs = 500

Accounting profit = tr-explicit = 2500-835 = 1665

Economic profit = Acconting profit - implicit = 1665-500 = 1165

option(B)