Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 11.1, Problem 1Q
To determine
The difference between accounting profit and economic profit.
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What is the difference between Economic Profit and Accounting profit?
how does "Economic Profit" differs from the measurement of profit in other fields such as Accounting. How are costs measured in Economics?
Can economic profit ever exceed accounting profit? Explain.
Chapter 11 Solutions
Microeconomics
Ch. 11.1 - Prob. 1QCh. 11.1 - Prob. 2QCh. 11.1 - Prob. 3QCh. 11.1 - Prob. 4QCh. 11.1 - Prob. 5QCh. 11.1 - Prob. 6QCh. 11.1 - Prob. 7QCh. 11.1 - Prob. 8QCh. 11.1 - Prob. 9QCh. 11.1 - Prob. 10Q
Ch. 11 - Prob. 1QECh. 11 - Prob. 2QECh. 11 - Prob. 3QECh. 11 - Prob. 4QECh. 11 - Prob. 5QECh. 11 - Prob. 6QECh. 11 - Prob. 7QECh. 11 - Prob. 8QECh. 11 - Prob. 9QECh. 11 - Prob. 10QECh. 11 - Prob. 11QECh. 11 - Prob. 12QECh. 11 - Prob. 13QECh. 11 - Prob. 14QECh. 11 - Prob. 15QECh. 11 - Prob. 16QECh. 11 - Prob. 17QECh. 11 - Prob. 18QECh. 11 - Prob. 19QECh. 11 - Prob. 1QAPCh. 11 - Prob. 2QAPCh. 11 - Prob. 3QAPCh. 11 - Prob. 4QAPCh. 11 - Prob. 5QAPCh. 11 - Prob. 1IPCh. 11 - Prob. 2IPCh. 11 - Prob. 3IPCh. 11 - Prob. 4IPCh. 11 - Prob. 5IP
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- Your uncle is thinking about to open a fish & chips restaurant. He estimated that it would cost $300,000 per year to rent the location, $45,000 to buy the stock and $60,000 to purchase equipment. In addition, he would have to quit his $85,000 per year job as an accountant. How much is his explicit cost, implicit cost, and briefly explain the difference between Accounting profit and Economic profit with examples?arrow_forwardEconomists define profit a bit differently than in accounting. In addition to explicit costs, we also subtract out implicit costs—what you could have earned from the next best alternative. For example, suppose that you are making $60,000 as an accountant. You decide to quit your job and open up your own accounting business. You end up making a profit of $50,000. How have you done? Accountants would call this a profit of $50,000 while economists would say that you just lost $10,000 (relative to what you were making before). So, economists define profits as being equal to total revenues minus total costs, where costs include the opportunity cost. Suppose that a firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital, and $200,000 on materials. Calculate the firm’s accounting profit? If the firm’s factory sits on land owned by the firm that it could rent for $30,000 per year, calculate economic profits.arrow_forwardAt what level of production does the marginal cost have the least value? What is the marginal cost at this level of production?arrow_forward
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