ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 1.3PA
To determine
To Determine: The accounting profit or loss and the economic profit or loss is to be determined in each situation.
Concept Introduction: Accounting Profit= Total Revenue −Explicit Cost.
Economic Profit = Accounting profit- Implicit Cost.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Question 1
(a) explain the term explicit and implicit costs.give examples.
(b) what is economic profit as compared to financial profit? to compute economic profits,which costs are used?Give example.
5) A firm that has positive accounting profit does not necessarily have positive economic profit. True or false? Explain.6) Assume that marginal cost in production is greater than average variable costs. Can you determine whether average variable cost is decreasing or increasing? Explain.
5d What is the relationship between accounting profit and economic profit? Which is relevant for a firm’s decision to continue production and why? Give examples as to what may cause a divergence between accounting and economic profit
Chapter 7 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Knowledge Booster
Similar questions
- 17. Refer to Figure 1. Curve 2 is Outdoor Equipment's Select one: a. Average total cost curve. b. Marginal cost curve. c. Average fixed cost curve. d. Average variable cost curve.arrow_forward13- Which one of these will continuously increase as more products are produced? a. Average fixed cost b. Fixed cost c. Variable cost d. None of the choicesarrow_forward29. What do you understand by retained earning / Ploughing back of profit? State its advantages and disadvantages?arrow_forward
- 8- A business is below the economic break-even point and above the operational break-even point. Therefore, it can be said that: *a) gives operating and economic profitb) gives economic profit and operating lossc) gives operating profit and economic lossd) causes economic and operational lossarrow_forward11- Al Shaihani is a halwa manufacturer which is famous for Omani Saffron Halwa. They wanted to increase their supply of halwa for the coming month of August 2021. However, due to COVID-19 Pandemic, the only available resources they could change are the number of their workers. Determine which type of production period Al Shaihani business is facing? a. Long run b. All of these c. Short - run d. Mid-runarrow_forward2. As a general rule, when accountants calculate profit they account for explicit costs but usually ignorea. certain outlays of money by the firm.b. implicit costs.c. operating costs.d. fixed costs.arrow_forward
- 1.Joe quits his computer programming job, where he was earning a salary of $50,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $24,000 per year. In his first year of business he has the following expenses: salary paid to himself, $40,000; rent, $0; other expenses, $25,000. Find the accounting cost and the economic cost associated with Joe’s computer software business.arrow_forward28) If average cost is increasing over a range , it should be the case that a) marginal cost is smaller than average cost over that range b) marginal cost is equal to average cost over that range c) marginal cost intersects the average cost over that range d) marginal cost is greater than the average costarrow_forward1. What is the formula to calculate profits? 2. Define Explicit and Implicit Costs. 3. Define Economic Profit and Accounting Profit. 4. Define Production Function, Marginal Product, and Diminishing Marginal Product. 5. Define Fixed Costs and Variable Costs. 5. Provide the formula/calculation for the following costs: Average Total Cost, Average Fixed Cost, Average Variable Cost, Marginal Cost. 6. Define Minimum Average Cost and Efficient Scale. 7. Define Economies of Scale, Diseconomies of Scale, Constant returns to scale.arrow_forward
- 6 If a company’s total revenue is $1,744,322, their explicit costs are $863,214, and their implicit costs are $506,688, then what is their Accounting profit? What is their economic profit? (Show your work).arrow_forward5. If a firm makes zero economic profit, then the firma) earns revenue that exceeds its economic costs.b) must shut down.c) can be earning positive accounting profit.d) has no fixed costs.arrow_forward2. Benson Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 14,000 pounds of raw chicken that costs $7,450, the company produces two parts: 2,500 pounds of drumsticks and 4,500 pounds of breast for a processing cost of $2,466. The chicken breast is further processed into 3,700 pounds of steak for a processing cost of $1,700. The market price of drumsticks per pound is $1.40 and the market price per pound of chicken steak is $3.70. If Benson decided to sell chicken breast instead of chicken steak, the price per pound would be $2.20. a-3. If the drumsticks are producing a loss, should that product line be eliminated? The drumstick product line be eliminated. b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base. Total cost…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning