Micro 3.4-Types of Profit MCQ Open Practice

Last updated 5 months ago

10 questions

Instructions

This formative assessment aims to test students' understanding of different types of profit in a microeconomic context, using real-world scenarios to deepen comprehension.

Required

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Micro 3.4-Types of Profit MCQ Open Practice

Last updated 5 months ago

10 questions

Instructions

This formative assessment aims to test students' understanding of different types of profit in a microeconomic context, using real-world scenarios to deepen comprehension.

Required

Question 1

What is accounting profit?

Total revenue minus total economic costs

Total revenue minus explicit costs

Sales revenue minus taxes

Gross revenue

Required

Question 2

In a competitive market, firms often earn what type of profit in the long run?

Economic Profit

Normal Profit

Gross Profit

Negative Profit

Required

Question 3

What is economic profit?

Total cost minus opportunity cost

Total revenue minus both explicit and implicit costs

Total revenue minus only variable costs

Net income from investments

Required

Question 4

Which of the following best describes normal profit?

Excess profit after all expenses

Minimum level of profit needed for a firm to remain competitive

Profit after taxes

Revenue from unsold goods

Required

Question 5

Why might a firm earn zero economic profit?

They have not paid taxes.

Implicit and explicit costs equal revenue.

They are in a declining market.

They have monopoly power.

Required

Question 6

What happens to economic profit when a new competitor enters the market?

It increases

It decreases to zero

It stays the same

It becomes negative

Required

Question 7

Which condition reflects a firm experiencing economic losses?

Explicit costs are less than revenue

Implicit costs exceed accounting profit

Price equals marginal cost

Revenue exceeds accounting profit

Required

Question 8

Real-world accounting profits may not represent what aspect of profitability?

Financial growth

Return on investments

Opportunity cost

Market stability

Required

Question 9

What is the implication of a firm earning only normal profit?

Firm should expand

Firm is just covering all costs

Firm has negative cash flow

Firm is over-invested

Required

Question 10

10.

If a company’s accounting profit is positive, what does that imply?

They have no economic profit.

They are profitable.

They are financially unstable.

They have paid all their expenses.

Question 1

What is accounting profit?

Total revenue minus total economic costs

Total revenue minus explicit costs

Sales revenue minus taxes

Gross revenue

Question 2

In a competitive market, firms often earn what type of profit in the long run?

Economic Profit

Normal Profit

Gross Profit

Negative Profit

Question 3

What is economic profit?

Total cost minus opportunity cost

Total revenue minus both explicit and implicit costs

Total revenue minus only variable costs

Net income from investments

Question 4

Which of the following best describes normal profit?

Excess profit after all expenses

Minimum level of profit needed for a firm to remain competitive

Profit after taxes

Revenue from unsold goods

Question 5

Why might a firm earn zero economic profit?

They have not paid taxes.

Implicit and explicit costs equal revenue.

They are in a declining market.

They have monopoly power.

Question 6

What happens to economic profit when a new competitor enters the market?

It increases

It decreases to zero

It stays the same

It becomes negative

Question 7

Which condition reflects a firm experiencing economic losses?

Explicit costs are less than revenue

Implicit costs exceed accounting profit

Price equals marginal cost

Revenue exceeds accounting profit

Question 8

Real-world accounting profits may not represent what aspect of profitability?

Financial growth

Return on investments

Opportunity cost

Market stability

Question 9

What is the implication of a firm earning only normal profit?

Firm should expand

Firm is just covering all costs

Firm has negative cash flow

Firm is over-invested

Question 10

10.

If a company’s accounting profit is positive, what does that imply?

They have no economic profit.

They are profitable.

They are financially unstable.

They have paid all their expenses.