economic profits and losses
Are essential to the reallocation of resources from less desired to more desired good B. Equalize the distribution of income in the long run C. Are both considered by economist to be a part of production costs D. Have no influence on the composition of domestic output And if profits are bad, are losses good? Why? Economic profits and losses: A. are both considered by economists to be a part of production costs. How do you feel about business profits and losses? Does maximizing profit (producing where MR = MC) imply an actual economic profit? C. have no influence on the composition of domestic output. 36. D) reallocate resources from less desired to more desired uses. Recall from previous lectures that firms use their average cost (AC) to determine profitability. The answer depends on firm’s profit margin (or average profit), which is the relationship between price and average total cost. B. are essential to the reallocation of resources from less desired to more desired goods. Why? The reliability of the financial results and analysis of economic activity depend on the accuracy of its calculation. B. are essential to the reallocation of resources from less desired to more desired goods. Unfortunately, they lack an understanding of the formation and function of profits and losses in a free market economy. Many economic issues concern profit and loss. The profit and loss (P&L) statement is a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a … C) contribute to a more equal distribution of income. Responses to Profits and Losses • Will the firm remain in business in the long run? Economists like to concentrate on economic profits and losses rather than accounting profits or losses because the economic profits and losses … – If it covers ALL of its costs • Firms that earn normal profit recover only their opportunity cost • Firms that earn positive economic profit recover more than their opportunity cost • Markets in which firms are earning economic From society’s point of view the economic function of profits and losses is to: A) promote the equal distribution of real assets and wealth. A monopolist calculates its profit or loss by using its average cost (AC) curve to determine its production costs and then subtracting that number from total revenue (TR). Accounting profit is one of the critical indicators. 3. C. have no influence on the composition of domestic output. When you know this fact, his decision to switch careers doesn’t seem like such a good idea. D. equalize the distribution of income in the long run. Profits and Losses with the Average Cost Curve. Economic profits and losses: A. Are profits bad? D. equalize the distribution of income in the long run. Economic profits and losses: A. are both considered by economists to be a part of production costs. Accounting Profit: How to Calculate. B) achieve full employment and price level stability. Average cost in this example is average total cost (ATC). He actually sustains an economic loss of $9,000. A profit and loss report is based on the calculation of profit (loss). Chapter 7 – Opportunity Cost, Economic Profit and Losses, and the Miracle of Markets Business success has a clear and simple measure — the bottom line, or the profits that remain once you subtract all costs from your revenues. Most people have strong feelings about these questions. Part of production costs, are losses good by economists to be a part of production costs MC ) an... Loss of $ 9,000 less desired to more desired goods A. are both considered economists. 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