Normal profit is a term for explicit profit the competitive rate of return the accounting profit forgone pure economic profit Q2: Which of the following items is most likely to be an implicit cost of production? the "competitive rate" salary the owner of the business pays herself for services provided property taxes on a building owned by the firm rental payments for a building utilized by the company and rented from another party the interest income foregone on the equity capital invested by owners

Q: are w and r, respectively. a. Write the Lagrangian expression for the cost minimization problem b.…

A: a) The Lagrangian function(l) look like :-  minimise (wL + rK) subject to q = q0 l = wL + rK + a ( q…

Q: ofit is found as total revenue (TR) minus total cost (TC). With that in mind, let us now consider…

A: The expenses such as labor, materials, overhead, and other resources needed to produce goods or…

Q: QUESTION 8 Select all that are true regarding marginal profit: O When marginal revenue exceeds…

A: Marginal profit is the profit procured by a firm or person when one extra or marginal unit is…

Q: Here is the following information about the production of single factory Total revenue function: TR=…

A: A firm optimizes its profits at the point where the marginal revenue is equal to the marginal costs…

Q: Which of the ff statements are true about cost function a. It estimate the total cost of production…

A: A cost function shows how production expense changes with change in the output level.

Q: (a) Nkrumah Clothing Limited produces its output using a Cobb-Douglas production function of the…

A: It is the mathematical expression that states the technological relationship between inputs and…

Q: Yuri has been offered a job with a weekly wage of $800. Yuri declines the offer and starts a…

A: Answer d. Companies benefit from economies of scale when their production becomes more efficient.…

Q: A firm has the following production function: q= f (2₁, 2₂) = 2₁02₂B a. Solve for the firm's cost…

A: Conditional input demand function refers to the demand of inputs which are the function of the input…

Q: Fixed costs differ from sunk costs in that a firm can avoid fixed costs by not producing anything

A: Avoidable costs are costs that do not occur if the activity is not performed. For example, supply…

Q: Assume that B = -Q² + 4,500Q and C= 2Q are the benefits and costs of increasing the units of X-brand…

A: Answer a) Given Information  Revenue = B = -Q2 + 4,500Q Cost = C = 2Q2 The Profit funcation for X…

Q: Give the area that represents the following Total Cost Total Variable Cost Total Fixed Cost Total…

A: Total cost is the total expenditure incurred to produce goods and services during a specific period…

Q: If the firm made total sales of $968 million (mn) in 2020, spent $121 mn on inputs and $52 mn on…

A: Gross margin is the difference between revenue and cost of goods sold, divided by revenue. Gross…

Q: Problem 2: Investment 1. You have the following information about a firm: DY=AK®$ L°s, 2) A=2,…

A: (i) Y = AK0.5L0.5 Differentiate Y w.r.t K to get MPK => MPK = dY / dK => MPK = 0.5A K0.5 -1…

Q: If the investment flow is I(t)-5000t0 5 calculate the capital formation from the end of first year…

A: The accumulation of capital is called capital formation and it is also termed as the investment in…

Q: Normal profits are Multiple Choice   the profits reported by accountants on a firm's annual…

A: ANS Profit is given by subtracting Total Cost (TC) from Total Revenue (TR). Mathematically it is…

Q: Sawyer Company used a predetermined overhead rate using estimated overhead of $320,000 and 8,000…

A: Labor is the one of the component of the factor of production this is variable factor by changing…

Q: At the short-run break-even price, the firm A) may be earning a positive or negative profit…

A: At the marketplace, break-even point is considered as the position where a firm or an individual is…

Q: Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000…

A: The firm has explicit costs which are clearly defined and paid out in the course of business. These…

Q: The following is cost information for the Creamy Crisp Donut Company Entrepreneur's potential…

A: Explicit Costs or the Accounting Costs refer to the actual monetary payments made during course of…

Q: Jefferson Company's demand for its only product exceeds its manufacturing capacity. The company…

A: Utilization rate is the rate or ratio that indicates the extent to which a resource is being used…

Q: Normal profit: Group of answer choices 1is earned when economic profit equals opportunity costs…

A: Economic profit: - economic profit is the revenue left after reducing both implicit and explicit…

Q: The difference between economic profit and accounting profit is equal to:   zero   implicit and…

A: Profit is the benefit incurred in trade activities. The difference between cost and the income…

Q: 20) Economic profits a) are equal to total revenue minus fixed costs b) are equal to the direct…

A: Economic profits refer to the amount a firm receives after the deduction of explicit and implicit…

Q: The following formula is used in economics to find a company's net income N, where P is the sales…

A: Net income in economics is calculated as :- N=S*(P-V)-F Where,  N = Net income ,  S = Sales Volume,…

Q: Question 2 Consider the same soda can manufacturer, with the same production function as in the…

A: The production function is Q(K , L) = 10KL (a) At w = 15, r = 150 then the cost equation is,…

Q: Economic profit is: total revenue minus explicit costs. total revenue minus explicit and implicit…

A: Total revenue is the product of price and quantity sold.

Q: Which of these must be present before you, as an economic advisor, would recommend a new company…

A: Perfect Competition : A Perfectly competitive market is the one in which there are large number of…

Q: Prepare a segmented income statement for Mike's Auto Center using the 2018 Actual results. Of the…

A: Mike Auto Car  Segment Income Statement

Q: Nintendo, a leading manufacturer of video games is about to introduce four new games. The…

A: The factors of production are the elements employed in the production process by the enterprise in…

Q: Show the effect of a 25% profit tax on the accounting profit of all firms in a competitive industry.…

A: The profit is the excess revenue made by the firm from the sale of the goods and services from the…

Q: The management of a manufacturing company has the following information: Revenue function: R = 2700Q…

A: Profit maximization is one of the key goals of all the firms in a market. Profit is the difference…

Q: a) The owners of firms in the real world would generally expect (in the long run at least) to have…

A: Let's first learn about economic profit. The difference between the revenue earned by the firm and…

Q: Given the information that follows: Sales = 750,000 explicit costs = 450,000 return you could have…

A: Accounting profits signify the amount of sales(or earnings) left after accounting for all explicit…

Q: Accounting profit is total revenue less by Select one: a) Implicit costs only b) Implicit and…

A: Economists and Accountants treats profit differently. The main component is costs. For accountants,…

Q: QUESTION 7 A firm's production function given by Q=2KL where K, L and Q denote capital, labor, and…

A: There are mainly two inputs(capital and labor) used in production in economics. The rise in…

Q: Use the table below to answer the next three questions. The below table displays the production…

A: Introduction: Fixed Cost- The cost of production which does not change with the increase in the…

Q: A business has the following costs: Rent: (none, the owner owns the building. Similar stores rent…

A: Opportunity cost: - opportunity cost is a forgone benefit that we could have earned by applying all…

Q: Marginal action of producing the same product is C'= 6Q? - 6Q + 400. Assuming Q> 0. a) Find the…

A: Marginal revenue (MR) is the increase in revenue that results from the sale of one additional unit…

Q: Short-Run Cost Consider a firm with the Cobb-Douglas production function F (K, L) = K 1/3 L1/2…

A: Production function refers to the mathemathical equation that shows the technological relationship…

Q: Assume that housing output is a function of the quantities of capital (k) and land (l) employed by a…

A: * Answer  :-  Given that ,  Assume that housing output is a function of the quantities of capital…

Q: To minimize costs in the short run, a firm should operate where which of the following optimizing…

A: This can be described as a concept that shows the revenue or income generation of the producer by…

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?