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Economics
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8 Dec 2017

24. A firm has $100 in explicit costs and sells the resulting output for $125. The normal rate of profit is 10 percent. Which statement is true? A) B) C) D) Economic profits exceed accounting profits. Economic profits are $25. Implicit costs are $10. Implicit costs exceed explicit costs. Normal profits are $15.

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Reid Wolff
Reid WolffLv2
8 Dec 2017
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Related questions

If the government sets the price of all pharmaceutical drugs equal to marginal cost, which of the following statements is TRUE?
I. Drug companies will see profits rise.
II. Consumers will pay lower prices for drugs today.
III. In the future, there will be very few new drugs.
A. II only
B. II and III
C. I, II, and III
D. I only
If a firm has revenues of $100, explicit costs of $50, and implicit costs of $50, then its economic profit is
A. $0.
B. $50.
C. $100.
D. $500.
If a firm has revenues of $100, explicit costs of $50, and implicit costs of $50, then its accounting profit is
A. $0
B. $50
C. $100
D. $500

___occurs when the difference between a company’s total revenue and combined explicit and implicit costs are equal to zero.

 

a) Normal profit.

b) Economic profit.

c) Abnormal losses.

d) Accounting profit.

 

23) Economic profits are less than accounting profits because the calculation of economic profit A) includes an amount for depreciation. B) includes an explicit charge for risk taking. C) includes the implicit charges for the use of capital owned by the firm and for risk taking. D) includes the implicit charges for the use of capital owned by the firm and for income taxes. E) is stipulated in regulations set forth by the Canada Revenue Agency.

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