Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Cost Of Production
Section12.1: What Are Costs?
Problem 1QQ
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I need full explanation to these questions
1. According to the text, economic profit serves as a beacon to entrepreneurs. This means
a. A positive economic profit sends a warning to investors not to invest more.
b. A negative economic profit sends a signal to investors that it is time to invest more.
c. A zero economic profit sends a warning to investors not to invest more.
d. A positive economic profit attracts resources while a negative economic profit sends resources away.
e. None of the above.
2. The difference between economic profit and accounting profit is
a. Average costs
b. Direct costs
c. Economic costs
d. Variable costs
e. Marginal costs
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