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Costs in Economics Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. When should sunk costs be considered in decision-making?

Question 2 2. If you spend $1000 to fix the brakes on your 15-year-old car, and then find out that you also need new tires, which will cost another $1000, what would be the most sensible decision to make?

Question 3 3. If someone is considering sunk costs when making a decision, what are they doing?

Question 4 4. Caribbean Constructions is planning to expand a complex of resort condos in the Bahama Islands. Which of these is a fixed cost for their project?

Question 5 5. Sandra is a veterinarian who is planning to start a new practice in Columbus, Ohio. Which of these is a variable cost of starting her business?

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Question 6 6. Which business do you think would have the highest fixed cost?

Question 7 7. Jesse decides to leave his job as a programmer with a salary of $70,000 to form his own startup, and he elects not to take a salary in the company's first year. Why would the $70,000 in lost income not be calculated in his company's financial records?

Question 8 8. How do implicit costs and explicit costs differ?

Question 9 9. The head of a bottle factory decides to cease running the factory as a 24-hour operation, only keeping it open for eight hours per day. Why is there an implicit cost to this decision?

Question 10 10. What is a long-run cost?

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Question 11 11. Transitioning from baking to catering is considered which of the following?

Question 12 12. What is a short-run cost?

Question 13 13. Josie decided to go to college full-time instead of working. Which of the following is the opportunity cost of going to college for Josie?

Question 14 14. Which of the following best describes opportunity cost?

Question 15 15. During the time Mary spent studying macroeconomics, she could have instead either made brownies or played the piano. She thinks to herself that if she wasn't studying, then she would have made brownies. In this case, her opportunity cost of studying is equal to which of the following?

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Question 16 16. Which one of the following correctly states why financial accounting information should conform to GAAP (Generally Accepted Accounting Principles)?

Question 17 17. Why do companies use cost accounting systems?

Question 18 18. Who regulates a company's cost accounting systems?

Question 19 19. If a company is trying to determine whether or not to enter a new sector, which of the following is most important?

Question 20 20. All of the following affect marginal cost, EXCEPT _____.

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Question 21 21. If a company is trying to determine a fair price for its goods, which of the following matters the most?

Question 22 22. Your business needs a new bathroom facility for customers. You plan on shopping around for the best fixtures at the best prices before you make a decision to purchase. You also have to shop around for a contractor to do the installation. Which type of transaction cost would apply in this situation?

Question 23 23. What are the costs associated with completing economic exchanges are called?

Question 24 24. Identify the set where transaction costs occur.

Question 25 25. Which of the following BEST describes a sunk cost?

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Question 26 26. Which of these statements is NOT correct?

Question 27 27. All of the following are alternative terms for implicit costs, EXCEPT:

Question 28 28. A contract to be completed in the next six months would be considered which of the following?

Question 29 29. Assume that you have two hours to spend at the mall. You can either visit the bookstore or enjoy a movie at the theater. The opportunity cost of watching a movie is equivalent to which of the following?

Question 30 30. What is the difference between cost accounting and financial accounting?

Costs in Economics Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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