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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Please show work / explain how you get answer as well. Thank you!

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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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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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.

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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)