Accounting profit and economic profit.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Which of the following graphs best represents the production possibility frontier of Country Y (Line Y), the production possibility frontier of Country Z (Line Z), and the production possibility frontier of this whole economy (Line W)? (Hint: Find W by adding the productive capabilities of Country Y and Z) Group of answer choices

Which of the following factors tend to decrease the wage differential between union and non union workers: unions tend to organize the firms with the lowest ability to pay initially all of the above unions must moderate their wage demand to keep workers competitive some nonunion employers pay their employees above union wages only ‘a’ and ‘b’ above

The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barriers to entry. Price (dollars) 24 8 MC ATC MR 30 D 45 50 Quantity/time The firm will maximize its profit at a quantity of units. After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is S The maximum profit the firm can earn in this situation is $ per unit for this output. How will the situation change over time? Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. ◇ Losses will induce firms to leave this market until the profit maximizing price falls to zero. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. This market is already in long-run equilibrium, and will not…

Answer 2

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Answer 6

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Accounting profit: Accounting profit refers to the total revenue minus total explicit cost

Economic profit: Economic profit refers to the total revenue minus implicit and explicit cost.

Answer 7

Chapter 13, Problem 1CQQ

To determine

Accounting profit and economic profit.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option ‘a’ is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Option (a):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (Total revenue−Total explicit cost) (total revenue – total explicit cost) $50($60−$10). Economic profit is (Total revenue−(Implicit cost +Explicit cost)) $10 ($60−($50+$10)) . Therefore, the value of accounting profit is $50 and the economic profit is $10.

Option (b):

Xavier accounting profit is not $90, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is total revenue minus implicit and explicit cost. Thus, option ‘b’ is incorrect.

Option (c):

When Xavier spends $10 for ingredients and sells $60 worth of lemonade, Xavier accounting profit will not be $10, because an accounting profit is the total revenue minus the total explicit cost. Economic profit is not $50, because economic profit is the total revenue minus implicit and explicit cost. Thus, option ‘c’ is incorrect.

Option (d):

When Xavier spend $10 for ingredients and sell $60 worth of lemonade, then the accounting profit will be (total revenue – total explicit cost) $50($60−$10) . But the economic profit is not $90, because the economic profit is (Total revenue−(Implicit cost +Explicit cost)) . Thus, option ‘d’ is incorrect.