This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Why is it not a contradiction to say that a firm is simultaneously earning an accounting profit but ... (Read 71 times)

rmenurse

  • Hero Member
  • *****
  • Posts: 513
on: Jun 29, 2018
Why is it not a contradiction to say that a firm is simultaneously earning an accounting profit but suffering an economic loss?
 
  What will be an ideal response?

Question 2

Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for 2 per dozen. Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is 1.75 .
 
  What level of profit is this firm earning? Explain.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Danny Ewald

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jun 29, 2018
Answer to Question 1

Accounting profit is determined by taking total revenue and subtracting explicit costs only. Economic profit is determined by taking total revenue and subtracting all economic costs which include explicit and implicit costs. Therefore, this statement is not a contradiction.

Answer to Question 2

Maxine's Cookie Shop is earning profits of 50 per day. This can be calculated by taking total revenue (2 x 200 = 400) and subtracting total cost (1.75 x 200 = 350).


rmenurse

  • Member
  • Posts: 513
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

lindahyatt42

  • Member
  • Posts: 322
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

The effects of organophosphate poisoning are referred to by using the abbreviations “SLUD” or “SLUDGE,” It stands for: salivation, lacrimation, urination, defecation, GI upset, and emesis.

Did you know?

Thyroid conditions may make getting pregnant impossible.

Did you know?

About 80% of major fungal systemic infections are due to Candida albicans. Another form, Candida peritonitis, occurs most often in postoperative patients. A rare disease, Candida meningitis, may follow leukemia, kidney transplant, other immunosuppressed factors, or when suffering from Candida septicemia.

Did you know?

All adults should have their cholesterol levels checked once every 5 years. During 2009–2010, 69.4% of Americans age 20 and older reported having their cholesterol checked within the last five years.

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

John Lewis Krimmel’s painting of the Fourth of July in Centre Square Philadelphia (1812) shows the d John Lewis Krimmel’s painting of the Fourth of July in Centre Square Philadelphia (1812) shows the d
Work Settings for People Earning Master’s and Bachelor’s Degrees in Psychology Work Settings for People Earning Master’s and Bachelor’s Degrees in Psychology
Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ... Abdominal thrusts are delivered with a firm thrust into the patient’s abdomen with an upward ...
Greet a First-Time Client With a Firm Handshake. Greet a First-Time Client With a Firm Handshake.
The hazmat training pyramid. It is important to train from the ground up, starting with a firm grasp ... The hazmat training pyramid. It is important to train from the ground up, starting with a firm grasp ...
Growth Accounting for Europe, A.D. 500–1700 Growth Accounting for Europe, A.D. 500–1700
Video: Egg and Sperm Formations in Animals Animation

For a complete list of videos, visit our video library