Principles of Microeconomics, California Edition
2nd Edition
ISBN: 9780393622102
Author: Dirk Mateer, Lee Coppock
Publisher: NORTON
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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:
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
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Principles of Microeconomics, California Edition
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