the statements with accompanying with the case. Concept Introduction Break Even: Break even is a level in economy, where the costs of a business are completely recovered by the revenues earned by the business. In other words, break even is achieved when the profits of a business are zero. Accounting Profit: Accounting profits are those profits, which are earned after the expenses of a business are recovered from the revenues earned. Economic Profits: Economic profits are those profits, which are earned after the implicit costs are recovered from the accounting profits. Explicit Cost: Explicit costs are those costs that include direct payments of expenses incurred to run a business. These costs include expenses such as salaries, rent and utilities expense. Implicit Cost: Implicit costs are the opportunity costs that include the profits given up in order to run the business.

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Chapter 9, Problem 1P

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To explain: the statements with accompanying with the case.

Concept Introduction

Break Even: Break even is a level in economy, where the costs of a business are completely recovered by the revenues earned by the business. In other words, break even is achieved when the profits of a business are zero.

Accounting Profit: Accounting profits are those profits, which are earned after the expenses of a business are recovered from the revenues earned.

Economic Profits: Economic profits are those profits, which are earned after the implicit costs are recovered from the accounting profits.

Explicit Cost: Explicit costs are those costs that include direct payments of expenses incurred to run a business. These costs include expenses such as salaries, rent and utilities expense.

Implicit Cost: Implicit costs are the opportunity costs that include the profits given up in order to run the business.

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