### Question 16Assume that we have the following two alternatives to choose from: - **Option A:** accounting profit = 100K- **Option B:** accounting profit = 75KWhat is the economic profit if we select option A?- a. 100K- b. 25K- c. 75K- d. There is not enough information to answer the question**Explanation:**This question appears to be exploring the concept of economic profit, which is calculated as accounting profit minus the opportunity cost of the next best alternative. In this scenario, if you choose Option A with an accounting profit of 100K, the opportunity cost would be the profit from Option B, which is 75K. Therefore, the economic profit for Option A would be:Economic Profit = Accounting Profit of Option A - Opportunity Cost (Profit of Option B) = 100K - 75K = 25KThus, the correct answer is **b. 25K**.

Economic profits is = Revenues - Explicit cost - opportunity cost. Accounting profits = Revenue -…

QUESTION 16 Assume that we have the following two alternatives to choose from: • Option A: accounting profit = 100K • Option B: accounting profit = 75K What is the economic profit if we select option A? a. 100K b. 25K

QUESTION 16 Assume that we have the following two alternatives to choose from: • Option A: accounting profit = 100K • Option B: accounting profit = 75K What is the economic profit if we select option A? a. 100K b. 25K

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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