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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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

To determine the benefits of extending hours of operation for a food truck business, the couple should calculate additional revenue, break-even analysis, market demand, and raise prices. They should analyze competitors' prices and customer sensitivity to price changes, determine price elasticity, and test the strategy by implementing a slight price increase and monitoring sales closely. If costs exceed revenues, the couple should analyze their financials, evaluate their business model, explore new revenue streams, and consider long-term viability. They should analyze their financial statements to identify high costs and areas for reduction, evaluate their business model based on market demand, and explore new revenue streams like catering, special events, or partnerships with local businesses. Long-term viability is a key consideration, as if the business still operates at a loss after making adjustments, it may be necessary to consider shutting down. Staying in business should be…

Respond to following post. You can charge higher prices if the parents think these are valuable by providing different services such as extended hours, healthy lunches, and smaller staff-to-child ratios. But pushing for prices much higher won’t make sense unless parents think the added value is worth the price hike. You should research your local parents to find out what they want. If you want your business to be profitable, then focus on your strengths, do great work and have a reputation. Promote your special products and keep your prices low. If you want to see if you’re making money, keep a log of all your profits and losses. You’re making money if you’re earning more than you’re losing. A break-even analysis can help you figure out how many customers you need to eat and start making money. Keep an eye on your budget so you don’t get off track.

If you are willing to pay up to $8 for your first cup of coffee the blank of your first cup of coffee is $8

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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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 Raj 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):

Raj 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 Raj spends $10 for ingredients and sells $60 worth of lemonade, Raj 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 Raj 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.