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.

Question

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Answer 1

Question

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

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.

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Answer 2

Question

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

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.

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Answer 3

Question

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

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!

Answer 4

Question

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

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!

Answer 5

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

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.

Answer 6

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

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.

Answer 7

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.

Answer 8

Expert Solution & Answer

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.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

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.

Answer 12

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.

Answer 13

Ch. 8.3 - Prob. 1MQ Ch. 8.3 - Prob. 2MQ Ch. 8.3 - Prob. 1.1MQ Ch. 8.3 - Prob. 2.1MQ Ch. 8.4 - Prob. 1TTA Ch. 8.4 - Prob. 2TTA Ch. 8.4 - Prob. 1MQ Ch. 8.4 - Prob. 2MQ Ch. 8.5 - Prob. 1TTA Ch. 8.5 - Prob. 2TTA

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.

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.

Answer to Problem 1RQ

Explanation of Solution

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Chapter 8 Solutions