Describe the equation for profit or loss of a firm.

Question

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Answer 1

Question

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

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Answer 2

Question

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

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

Answer 3

Question

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

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

Answer 4

Question

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

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 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

Answer 6

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)

Accounding profit=Total revenue−Explicit cost

Economics Concept Introduction

Explicit cost: Explicit cost is the direct cost paid by a firm for the usage of factors of production.

Implicit cost: Implicit cost is an indirect cost or the opportunity cost of the owner who is also working in the company.

Answer 7

Chapter 8, Problem 1QR

To determine

Describe the equation for profit or loss of a firm.

Answer 8

Expert Solution & Answer

Explanation of Solution

Profit is attained by a firm when a firm’s total revenue exceeds its total cost. If a firm’s cost exceeds its revenue, then the company will suffer a loss. The equations for economic profit and accounting profit can be described as shown below:

Economic profit=Total revenue−Total cost=Total revenue−(Explicit cost+Implicit cost)