When calculating a firm's profit, an economist will subtract only
a. explicit costs from total revenue because these are the only costs that can be measured explicitly.
b. implicit costs from total revenue because these include both the costs that can be directly measured as well as the costs that can be indirectly measured.
c. the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.
d. the marginal cost because the cost of the next unit is the only relevant cost.
c
You might also like to view...
"As long as supply-side effects are ignored, the balanced budget multiplier is equal to zero." Is the previous statement correct or incorrect? Define the balanced budget multiplier and then explain your answer
What will be an ideal response?
Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused
a. an increase in demand for housing and higher housing prices. b. an increase in demand for housing and lower housing prices. c. a reduction in demand for housing and higher housing prices. d. a reduction in demand for housing and lower housing prices.
An approach that can be taken by someone directly involved in a transaction to solve the problems caused by information asymmetry is:
A. statistical discrimination. B. proofing. C. mandating that information be shared. D. All of these are ways to solve information asymmetry.
If an exclusive union is successful in restricting the supply of labor, the:
A. wage rate will rise. B. quantity of labor demanded will rise. C. number of job opportunities in the firm or industry will increase. D. demand for labor curve will shift leftward.