What is the difference between the accountant’s concept of profit and the economist’s view of profit?
What will be an ideal response?
Accountants tend to include in TC contractual costs only. The economist measures TC as the cost of all the firm’s inputs, including the opportunity cost of the capital or any other inputs, such as labor, provided by the firm’s owners. Accounting profit is generally larger than economic profit, so that positive accounting profit may correspond to zero economic profit.
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Refer to Scenario 17.5. The owners can't know whether the workers are exerting high or low effort if income is
A) $5000. B) $7000. C) above $7000. D) $13,000. E) above $13,000.
Lobbying efforts by individuals and firms:
a. increases productive efficiency in the economy. b. merely transfer income and wealth from one individual or group to another. c. enables the firms to experience economies of scale. d. improves the overall standard of living in the economy. e. helps the economy to produce the efficient level of output.
In the long-run, higher saving leads to
What will be an ideal response?
Exchange rates change because of relative
A. Income, relative price, and relative interest rates of countries. B. Price changes but not relative interest rate changes. C. Interest rate changes but not relative income changes. D. Income changes but not relative price changes.