Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 1.4P
To determine
Acceptability of the argument.
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Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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- Distinguish between implicit and explicit costs and give examples of each. In addition, explain how explicit and implicit costs affect the distinction between economic profit and accounting profit. What explains the distinction between the two measures of profit?arrow_forwardLooking to see how to figure outarrow_forwarda) The owners of firms in the real world would generally expect (in the long run at least) to have some positive of profits on their accounting statements. However, in economic models we usually assume that firms will be willing to operate for zero economic profits even for the long term. Explain why this is the case.arrow_forward
- Which of the following is most likely to be an implicit cost?*rental income foregone on assets owned by the firmsalaries paid to the firm’s board of directorstransportation cost on raw materialsinterest payments on an outstanding loan of the firm Economic profit is frequently*greater than total revenue.defined as total revenue minus total fixed cost.irrelevant to the owner of a firm who is concerned instead with accounting profits.less than accounting profit. From an economics perspective, accounting methods tend to*overstate profits and losses.overstate profits and understate losses.understate profits and overstate losses.understate profits and losses. Your aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. Your aunt’s opportunity costs comprise*the accounting costs.the accounting costs and the implicit costs.all…arrow_forwardThe gap that exists in a graph between total costs and fixed costs represents the variable costs of the company. True or falsearrow_forwardJoe quits his computer programming job, where he was earning a salary of $70,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $20,000 per year. In his first year of business he has the following expenses: salary paid to himself, $45,000; rent, $0; and other expenses, $40,000. Find the accounting cost and the economic cost associated with Joe's computer software business. (Enter numeric responses using an integer.) The accounting cost of Joe's business is $ (Enter your response as an integer.) es Get more help Clear all Check answerarrow_forward
- a software production firm, average product has started falling and total output indicated diminishing trend. The production manager Mr. Yahya called you and asked you to see the condition of marginal product. You analyzed the situation and reported that marginal product falling more than average product. Mr. Yahya got surprised. In your opinion which situation the firm is heading to?arrow_forwardDo not use Aiarrow_forwardJoe quits his computer programming job, where he was earning a salary of$70,000per year, to start his own computer software business in a building that he owns and was previously renting out for$24,000per year. In his first year of business he has the following expenses: salary paid to himself,$42,500;rent, $0; and other expenses,$10,000. Find the accounting cost and the economic cost associated with Joe's computer software business. Accounting cost: ____ Economic Cost: _____arrow_forward
- Classify the following costs as explicit or implicit. Explain your answer ABC Company spent $1000 for coffee and biscuits for their staff. Jim used $50000 from his savings account to buy a car for his business BHP paid interest on company issued bonds Frank spends 4 hours every weekend cleaning his officearrow_forwardIf You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year. then your accounting profit is: Select one: a. 20,000 Ob. 30,000 O c. 40,000 O d. 10,000 O e. 60,000arrow_forwardDon't use ai to answer I will report your answerarrow_forward
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