Based on the given graph: a. If this firm profit-maximizes, how much output will it produce and what price will it charge? b. When this firm profit maximizes, what (compute) is the firm’s profit or loss? Is this firm in a short run or long run equilibrium?  Why? c. Does the firm minimize cost? Why or why not? How much excess capacity does this firm have?

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Accounting and Economic Profit analysis

One comes across the concept of Profits in the context of business and in analyzing the results of business activity. Profits of a business can be accounting profits, and they can also be economic profits. So how does one understand the concept of accounting versus economic profits?