The Role of Profits and Losses

Fill in the blank: Total cost includes all costs involved in ______ something to sell.

• A) buying

• B) making

• C) advertising

• D) transporting

What is Revenue?

• All the money taken in by a business

• A cost that stays the same no matter how much business is done

• The costs of doing business

• All costs involved in making something to sell.

What is an example of a fixed cost?

• Raw materials

• Labor costs

• Capital goods

• Advertising expenses

Fill in the blank: To measure profit, economists look at both total revenue and total ______.

• income

• cost

• sales

• overhead

What is the average cost of making a bike if the total cost is $150,000 for 1,000 bikes?

• $100

• $150

• $200

• $250

• $30,000

• $40,000

• $50,000

• $60,000

What must producers do to be successful in business?

• Increase prices

• Reduce quality

• Work hard to keep their costs down

• Ignore customer needs

What happens if producers do not satisfy their customers?

• They gain more profit

• Customers may turn to other businesses

• They reduce costs

• They increase sales.

What does it mean to lay off a worker?

• To promote them

• To give them a raise

• To release them because there is no longer work

• To transfer them to another department.

How does competition prevent profits from being too great?

• By reducing production

• By increasing prices

• By increasing production and reducing prices

• By eliminating products.