1.The computation of economic cost is based on the principle of
.
2. A firm’s implicit cost is defined as the cost of nonpurchased inputs, such as the entrepreneur’s
and.
3. Economic profit equals
minus
.
4. Fill with “economic” or “accounting”: Becausecost typically exceedscost,
profit typically exceeds
profit.
5. Suppose a person quits a job paying $45,000 per year and starts a business with $11,250 withdrawn from her savings account earning 4 percent per year. Calculate the implicit cost of starting her own business.
6.The _________ (long/short) run is defined as a period over which a firm cannot change its production facility.
7. When a firm is perfectly flexible in its choice of all inputs, the firm is operating in the
(long/ short) run.
8. The opportunity cost of driving for Uber or Lyft includes the
and
from a regular job. (Related to Application 1 on page 519.)