Question #3 competitive firm is dodifferentiated nature of the products offered by thehrm. $23-2a• An oligopoly is a market in which a few firms areproducing either differentiated or nondifferentiatedproducts and entry is possible but not easy. $23-2a* The shape of the demand curve facing a firm in anoligopoly depends on how the firms interact. $23-20• The marginal-revenue curve for all firms except those inperfect competition is downward sloping and lies belowthe demand curve. The marginal-revenue curve for theperfectly competitive firm is the same as the demandcurve, a horizontal or perfectly elastic curve. $23-2b3. What is the difference between economic profitand accounting profit?• Accountants measure only the direct costs. Economistsmeasure all opportunity costs. $23-3aKEY TERMSaccounting profit, 517economic profit. 517equity capital, 517EXERCISES1. Use the following to calculate profit at each quantity ofoutput(Total)Output(a)127-☀Price(P)$1,900$1,700$1,650$1,600$1,550$1,500$1,450$1,400$1,350$1.300TotalRevenue (TR)$ 0$ 1,700$ 3,300$ 4,800$ 6.200$ 7,500$ 8.700$ 9.800$10.800$11.700negative economic profit, 518normal profit, 519positive economic profit, 51920Total Cost(TC)$1,000$2,000$2,800$3,500$4,000$4,500$5,200$6.000$7.000$9,000resources?• Economic profit indicates whether resources willremain in their current activity or be distributed to:different activity. $23-3b• When economic profit is positive, all resources,including the firm's investors and owners, arepaid more than they could have expected to getanother activity. Others seeing this will redirect thtime and investments to that activity. Conversely,when economic profit is negative, all resources aregetting paid their opportunity costs. Resource ownerywill take their resources and place them into anactivity that promises to pay more. $23-3bQimperfect competition, 515zero economic profit, 5182. Use the table in exercise 1 to calculate marginal revenueand marginal cost.3. Use the information in exercises 1 and 2 to graphicallyshow maximum profit. Label the profit-maximizingquantity and price, total cost, total revenue, and profit.4. Can accounting profit be positive and economic profitnegative? Can accounting profit be negative and economic profit positive? Explain.5. Use the following information to calculate accountingprofit and economic profit;Sales $100Employee expenses $40Inventory expenses $20Value of owner's labor in any other enterprise $40HeMacBook Air

Profit is the difference between the revenue received from the production of the output and the…

Answered: curve, a 3. What is the difference…

curve, a 3. What is the difference between economic profit and accounting profit? • Accountants measure only the direct costs. Economists measure all opportunity costs. $23-3a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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