Question

What costs do economists include when calculating profit?

Select 2 answers apply:

• explicit costs

• implicit costs

• variable costs

• fixed costs

Question 40

Variable costs refer to __________ that can easily be increase or decreased in a __________ period.

Select the correct answer below:

outputs, long

outputs, short

inputs, long

inputs, short

FEEDBACK

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In addition to rent and profit for entrepreneurship , what else do factor payments include?

Select the correct answer below:

raw material prices

profit

interest and dividends

wages and salaries

all of the above

FEEDBACK

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Answer 1

1) The answer is options C and D.

Because for profit calculation economists use total cost. Total cost include both variable cost and fixed cost. Therefore, options C and D are the answer.

2) The answer is option D.

Because variable cost is an input cost. Hence we can refer variable costs as inputs. Variable factor can change in short run time period. So, variable costs can increase or decrease in short run time period. Therefore, option D is correct.

3) The answer is option D.

Land, labor, capital and entrepreneurship are the four factors of production. Rent is the payment for land, wages and salaries are the payment for labor, interest is the payment for capital but not dividends and profit is the payment for entrepreneurship. Therefore, option D is the correct answer.