IC #1 Grading Key (1-23-09)

Q #1.

The owner of a copy business has just paid $6,000 (non refundable) to lease (rent) a floor of the building in which the business will be located. The lease expense is what type of cost?

a. opportunity cost (-2)

b. marginal cost (-1)

c. sunk cost *(correct, -0)

d. variable cost (-3)

e. implicit cost (-3)

Q #2.

To our society, the foregone civilian goods and services that could have been produced by the resources being used to carry out the war in Iraq is known as what type of cost?

a. sunk cost (-2)

b. marginal cost (-2)

c. hidden cost (-1)

d. opportunity cost *(correct, -0)

e. negative cost (-3)