a)
Total revenue
a)
Explanation of Solution
Quantity output = 10,000
Price = $10 per unit
Then,
Introduction: Total revenue is the multiplication of quantity output and the price per unit.
b)
Total implicit cost
b)
Explanation of Solution
Implicit cost of capital = $10,000
Then, total implicit cost would be:
Introduction: The costs which are already occurred but are not shown or visible as a cost or expense are implicit costs.
c)
Accounting profit
c)
Explanation of Solution
Explicit cost = $70,000
Introduction: The difference of total revenue and explicit cost refers to the accounting profit.
d)
Economic profit
d)
Explanation of Solution
Introduction: Economic profit refers to the difference between the revenue which is received from the sale and the costs of inputs including opportunity costs.
e)
Better use of resources
e)
Explanation of Solution
There is no better use of resources because the economic profit is $0 and the firm is earning a normal profit or no profit which means there is no better alternative to use for resources.
Introduction: Economic profit refers to the difference between the revenue which is received from the sale and the costs of inputs including opportunity costs.
Chapter 52 Solutions
Krugman's Economics For The Ap® Course
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