The accountant's definition of profits, or the definition used for tax purposes, is not wholly satisfactory from the economist's point of view because
A) accountants are paid by business firms and consequently tend to exaggerate the size of profits.
B) accountants deal with empirical data while economists are interested in theoretical explanations.
C) accountants tend to minimize profits in order to avoid the payment of unnecessary taxes.
D) accounting costs do not include the entrepreneur's opportunity costs.
D
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With productive efficiency:
a. There is production of that particular mix of goods and services most wanted by society b. The available supplies of factors of production are variable in quantity and quality c. There is production of any particular mix of goods and services in the least costly way d. The state of technology, or methods used to produce output, constantly change
We would expect the cross-price elasticity of demand between coffee and
A. tea, and coffee and cream to both be negative. B. tea, and coffee and cream to both be positive. C. tea to be positive, but negative between coffee and cream. D. tea to be negative, but positive between coffee and cream.
When price is above the equilibrium level, competitive price cutting will continue as long as quantity supplied exceeds quantity demanded.
Answer the following statement true (T) or false (F)
Refer to the above figure. Suppose the economy had been at point A and now is at B. What could have caused the movement to B?
A) Unusually good weather causes the wheat crop to be larger than normal. B) Both the labor force and the population increased. C) Winter storms cause factories in the north to be shut down for several weeks. D) Government spending increased causing aggregate demand to increase.