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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In which of these years was there very high inflation and a recession?
A. 1937 B. 1980 C. 1990 D. 2001
A __________ discount rate makes it __________ advantageous to sell securities to obtain additional reserves
A) higher; less B) lower; more C) higher; more D) None of the above.
Assume a competitive price-searcher firm is earning an economic profit. The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23 . The firm should
a. change neither its price nor its output level b. reduce its price and increase its output level c. increase its price and reduce its output level d. reduce both its price and its output level e. increase both its price and its output level
If 1 dollar is equal to 5 Swedish kroner, the dollar price of a kroner is
A. $.20. B. $1.20. C. $.50. D. $.05.