Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were: Multiple Choice $200,000 and its economic profits were zero. $100,000 and its economic profits were $100,000. zero and its economic loss was $200,000.

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were: Multiple Choice $200,000 and its economic profits were zero. $100,000 and its economic profits were $100,000. zero and its economic loss was $200,000.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Concept explainers

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?

Question

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at
$300 per unit, its accounting profits were:
Multiple Choice
$200,000 and its economic profits were zero.
$100,000 and its economic profits were $100,000.
zero and its economic loss was $200,00.
$100.000 and its economic profits were zero.
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