PRIN.OF ECON.ACCESS CODE
2nd Edition
ISBN: 9780393691757
Author: Mateer
Publisher: NORTON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 2QFR
To determine
Superiority of economic profit over accounting profit
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
What is the difference between Economic Profit and Accounting profit?
Use your own example to clearly differentiate between an "accounting profit" and
an "economic profit".
Tim is thinking of opening a garment store. He estimates that it would cost $270000 per
year to rent the location and buy the merchandise. In addition, he would have to quit his
$63000 per year day job. Tim estimates he can sell $315600 worth of garments in a year.
a. What will be the accounting profit and economic profit for Tim?
b. If you are an economist, should you suggest opening the store? Why?
Chapter 8 Solutions
PRIN.OF ECON.ACCESS CODE
Knowledge Booster
Similar questions
- Why do economists believe that economic profit is the more accurate measure of a business success? Why is economic profit the superior method of determining a business success?arrow_forwardHow do you define 'profit'?arrow_forwardWith the help of an example explain the difference between accounting and economic profit. Building on your answer then explains why a perfectly competitive firm would operate in the long run even if it makes 0 profitarrow_forward
- Are there fixed costs in the long-run? Explain briefly.arrow_forwardConsider the following information about a business Rodriguez opened last year: price = $5; quantity sold = 15,233; implicit cost = $18,000; explicit cost = $33,000. What was Rodriguez's accounting profit and economic profit? Show your work.arrow_forwardUse the graph above to answer these questions: What is the profit-maximizing level of output? What is the economic profit? What is the per-unit amount of profit at the profit-maximizing level of output?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning