What is the difference between accounting profits and economic profits? Which of the two concepts is more appropriate for explaining decisions made by entrepreneurs? Explain
What will be an ideal response?
The difference between accounting profits and economic profits is implicit costs, which represent the opportunity costs of factors of production that are owned, such as labor and capital. Opportunity cost is the highest value of alternatives to a firm's inputs. Economic profits take such implicit costs into consideration and so is a more appropriate for explaining the behavior of entrepreneurs.
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What are the five major reasons for government involvement in a market economy?
What will be an ideal response?
Fast Stop, a gasoline and grocery quick mart, charges $1.50 for a small bag of pretzels and $2 for two small bags of pretzels. This is an example of ________.
A) third-degree price discrimination B) two-part pricing C) second-degree price discrimination D) an all-or-nothing offer
If external costs are included and added to a firm's private costs, then
A) the demand curve will shift to the right. B) the demand curve will shift to the left. C) the supply curve will shift to the right. D) the supply curve will shift to the left.
Production is productively efficient when
a. the maximum possible output is being produced from a given collection of inputs b. people are working their hardest c. no more capital can be substituted for labor d. technological innovation is no longer desirable e. workers perform their duties at the expected level, even if they are physically capable of doing more