EBK INTERMEDIATE MICROECONOMICS AND ITS
EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
Question
Book Icon
Chapter 8, Problem 1RQ
To determine

State some reasons for any firm to be concerned about its economic profits, and also about the opportunity costs the people earning for investing in the firm.

Expert Solution & Answer
Check Mark

Answer to Problem 1RQ

The accounting profits allow the firms to pay for their taxes and dividends from their surpluses, on the other hand, the economic profits imply that firm is able to utilize the resources available in a proper and optimum manner.

Explanation of Solution

While the profits from accounting determine the taxes and dividends, the economic profits imply that the factors employed in the firm are properly utilized in production.

This means that when the factors employed are not properly utilized in the production process the company automatically experiences deterioration in its economic profits, and thereby affecting its production capabilities.

Economics Concept Introduction

Introduction: According to the utility maximization concept, it is assumed that the consumer decides to spend each and every penny of his available income on the products that he believes yields the maximum marginal utility.

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
Published in 1980, the book Free to Choose discusses how economists Milton Friedman and Rose Friedman proposed a one-sided view of the benefits of a voucher system. However, there are other economists who disagree about the potential effects of a voucher system.
The following diagram illustrates the demand and marginal revenue curves facing a monopoly in an industry with no economies or diseconomies of scale. In the short and long run, MC = ATC. a. Calculate the values of profit, consumer surplus, and deadweight loss, and illustrate these on the graph. b. Repeat the calculations in part a, but now assume the monopoly is able to practice perfect price discrimination.
The projects under the 'Build, Build, Build' program: how these projects improve connectivity and ease of doing business in the Philippines?
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Text book image
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Text book image
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning