SAMPLE SECOND EXAM
ECON 206 NAME______________________
PART I. MULTIPLE CHOICE. Please circle the letter of the best
answer.
1. Economists assume that the principal motivation of producers
is:
a. Psychological gratification.
b. Social status.
c. Profit.
d. Their preference for being "their own person."
2Accounting and economic costs differ because:
a. Accounting costs exceed economic costs whenever any
factor of production is not paid an explicit wage.
b. Accounting costs include implicit opportunity costs and
economic costs do not.
c. Economic costs include the opportunity costs of all
resources used while accounting costs include actual dollar
outlays.
d. Accounting costs include explicit costs and economic
costs do not.
3. Normal profit implies that:
a. economic profit is zero.
b. All factors employed are earning an amount equal to
their opportunity costs.
c. The factors employed are earning as much as they could
in their best alternative employment.
d. All of the above.
4. If a firm can change market prices by altering its output,
then:
a. it has market power.
b. it is a price taker.
c. its faces a horizontal demand curve.
d. it is a perfectly competitive firm.
