Asked by
Haleigh Trotter
on Nov 26, 2024Verified
Economic profits
A) are identical to accounting profits.
B) must be earned by every firm that continues to produce in the long run.
C) serve no useful economic purpose and should never occur in a competitive economy.
D) serve in the short run as an incentive to guide production decisions, but indicates the existence of barriers to entry in the long run.
Economic Profits
The surplus achieved when total revenue exceeds the total costs, including both explicit and implicit costs.
Accounting Profits
The difference between total revenue and explicit costs, representing the net income of a business according to standard accounting practices.
Competitive Economy
An economic system where businesses operate in a free market, competing for consumers on price, quality, and service.
- Grasp the distinction between economic and accounting profits.
- Discuss the implications of a focus on profit for business efficiency and decision-making.
Verified Answer
IK
Learning Objectives
- Grasp the distinction between economic and accounting profits.
- Discuss the implications of a focus on profit for business efficiency and decision-making.